I move that the Bill be now read a Second Time. This Bill is of a somewhat technical nature and I arranged, on that account, to have an explanatory memorandum circulated with it. The purpose of the Bill is to amend the laws in respect of hire-purchase and sales upon credit and I feel sure that a Bill having that purpose will be approved in principle by the Dáil and any discussion which may take place upon it will be confined to the details of its provisions, which would ordinarily be considered on the Committee Stage.
The purpose of the Bill is to protect the interests of persons who acquire goods under hire-purchase or credit sales agreements and who, owing to their circumstances, may be, as the law stands, subjected to undue difficulty or hardship and may be unable to protect their own interests. It is not proposed to interfere, and I think the House will agree it is not desirable that it should interfere, with the legitimate activities of owners and finance companies in the sphere of hire-purchase, as their activities, in general, serve a useful purpose by enabling persons of modest means to obtain the earlier use of furniture, bicycles and similar commodities, than would otherwise be possible for them. Moreover, in so far as hire-purchase and credit sale arrangements facilitate the acquisition of motor lorries, machinery and other industrial equipment, they encourage commercial and industrial expansion, particularly by small-scale concerns.
Transactions of that kind, hire-purchase and credit sale transactions, had been increasing steadily in volume in this country, as in other countries, in the years prior to the outbreak of the war. In 1938 the value of goods which were acquired under such agreements was approximately £1,500,000 and there is every likelihood that, with the resumption of normal trading facilities, that figure will be exceeded in the future. It is accordingly clear that the hire-purchase system has become an important factor in the social and economic life of the community and that, as such, it is desirable in the community's interests that it should be kept free from abuse, in so far as it can be kept free from abuse, by means of legislation.
Some years ago the position in regard to trading of that character was investigated by an inter-departmental committee, and the report of that committee showed that only a small number of complaints had been received from aggrieved persons and that, generally, there was no evidence that there have developed so far, in this country, any widespread abuses in the hire-purchase system. Nevertheless, the existing law in regard to hire-purchase is unsatisfactory in many respects and there have been some instances in which traders had availed themselves of the unsatisfactory nature of the law to take unfair advantage of persons buying goods by these methods. The Bill, which is designed to prevent wrongs in the future rather than cure wrongs which have already occurred, is being introduced to make sure that serious abuses do not develop in the future. I should add that the expansion of the hire-purchase system has created similar problems in other countries, and in passing this Bill we will be keeping abreast of the practice elsewhere.
The object of the Bill is, as I have said, the protection of persons who, owing to their circumstances, are not in a position to protect themselves. It is not intended to interfere with the hire-purchase business to any greater extent than is necessary to achieve that purpose. The scope of the Bill is, accordingly, limited to cases where the hire-purchase or credit sale price does not exceed £100. It is assumed that persons in a position to acquire goods of a value in excess of £100 should be able to look after their own interests.
One of the unsatisfactory features of hire-purchase agreements, at the moment, is that the person who acquires goods by that means frequently has no idea of the cost to him of the hire-purchase facilities, and he is only aware of the fact that, by paying instalments over a certain period, he will acquire the ownership of the goods. A person may, in that manner, be induced to pay more for hire-purchase facilities than he would agree to if he had a full knowledge of the facts. The Bill seeks to remedy that position by providing that the hirer of goods will be furnished, prior to the making of an agreement by him, with information as to the cost price of the goods as distinct from the hire-purchase price. The same arrangement will apply in respect to credit sales exceeding £5 in value.
Hire-purchase agreements are at present covered by the law of contract, and a person hiring goods, who wishes to return them to the owner, may find that under a minimum payment clause in the agreement, he has contracted to pay the greater part of the total hire-purchase price, whether he continues to hire all the goods or not. The Bill seeks to remedy that position, by enabling the hirer of the goods, if he has taken reasonable care of them, to terminate a hire-purchase agreement before a final payment is made, and to return the goods, by giving written notice and paying half of the total purchase price, or paying the amount due at the time of the termination of the agreement, whichever sum is the greater. Payment of at least half the total hire-purchase price affords reasonable compensation to the owner of the goods, who is also entitled to receive any installation cost that may have been incurred. In order to ensure that no person, through ignorance of the law, will be prevailed upon to forgo the right to return the goods, it is provided in the Bill that any agreement containing a contracting-out clause will be void.
A common feature of hire-purchase agreements is a clause giving the owner of the goods the right to enter the premises of the hirer of the goods, and to seize the goods without further ado in the event of the hirer defaulting in payment. The effect of such a clause is, that a person who has paid a considerable proportion of the cost of the goods may, owing to inability to pay an instalment, lose possession of all the goods without obtaining any credit for what he has paid. It is unavoidable from time to time that persons obtaining goods by the hire-purchase system should, owing to temporary financial troubles, have to return goods, but that is a different matter from permitting a trader to seize all the goods without compensation, merely because an instalment was not paid.
The Bill provides that any clause in an agreement providing for the entry of the owner on to a hirer's premises to seize goods is void, and further, that where one-third of the hire-purchase price is paid, the owner can regain possession of the goods, even if there has been default in the payment of instalments, only through the court. Where an application for the recovery of the goods comes before the court the court will have power, if it thinks fit, to postpone the return of the goods, in order to enable the due amount to be paid, or to transfer ownership of part of the goods to the hirer, and to return the remainder to the owner. It is also provided that where there is more than one agreement, appropriation of the instalments by an owner, in such a way as to deprive the hirer of his rights under each separate agreement, is prevented.
Another source of abuse in regard to hire-purchase agreements is that the anxiety of persons in poorer circumstances to avail themselves of hire-purchase facilities provides an opportunity for owners to dispose of inferior quality goods to such persons who, when they find the goods are unsatisfactory, may also discover that the hire-purchase agreements into which they entered, precludes them from suing the owner of the goods for breach of warranty. There are sections in the Bill which provide that the same conditions as to warranty, quality, and the like, will apply to hire-purchase transactions as to ordinary commercial transactions. These are the main provisions of the Bill and, with regard to them, I feel sure there will be little difference of opinion amongst Deputies.
Some Deputies may think that the legislation should go further, but I ask them to keep in mind that, while it is desirable to eliminate the possibility of abuse arising out of hire-purchase agreements, it is also, from the social and economic point of view, desirable to facilitate and to ensure the continuance of commercial transactions of that nature. I should also point out that the Bill aims at reducing law costs, by providing that proceedings for recovery of goods may be instituted in any district court, provided the hire-purchase price does not exceed £25. At present such proceedings cannot be taken in the district court, except in the Dublin area. I have dealt with the main provisions of the Bill, the need for which I assume will be generally accepted, and I recommend it to the Dáil.