The purpose of this Bill is to protect the interests of that section of the community which acquires goods under hire-purchase or credit sale agreements. It is not desirable, as I am sure the Seanad will agree, and it is not proposed in the Bill, to interfere with the legitimate activities of traders and finance companies in the field of hire-purchase, but it is desirable to prevent the development of possible abuses. The hire-purchase system serves a useful purpose in enabling persons of modest means to acquire and to obtain the use of, earlier than would otherwise be possible, such articles as furniture, bicycles, radio sets and the like.
In so far as they assist in the acquisition of motor vehicles, machinery and other types of plant, hire-purchase facilities encourage commercial and industrial expansion, particularly by smaller concerns. Before the war, hire-purchase and credit sale transactions had in this country and in other countries been increasing steadily in volume, and in 1938 goods to the value of £1,500,000 were acquired under hire-purchase agreements, and there is every likelihood, when the supply position is again normal, that that figure will be exceeded in future.
The hire-purchase system has become an important factor in the social and economic life of the country and as such, it must in the community's interest, be kept free from abuses, in so far as that can be achieved by legislation. While a number of complaints have been received from aggrieved persons, there is no evidence so far that any widespread abuses in the hire-purchase system have developed in this country. Nevertheless, the existing law is unsatisfactory in certain respects and this Bill is designed to prevent abuses in the future rather than to cure abuses which have already occurred.
I should add that the expansion of the hire-purchase system has created similar problems in other countries, and in the enactment of these proposals, we will be keeping abreast with the practice already established in other countries. One of the unsatisfactory features of the manner in which hire-purchase transactions are carried on 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 for a certain period he will eventually acquire the ownership of the goods.
A person may, because of that lack of knowledge of the cost of hire-purchase facilities, be induced to pay more for these facilities than he would agree to if he had full knowledge of the facts. The Bill seeks to remedy that position by providing that the person entering into a hire-purchase contract as a hirer of goods, will be furnished, prior to the making of the agreement, with information as to the cash price of the goods as distinct from the hire-purchase price. That arrangement will also apply in respect of credit sales exceeding £5 in value. Hire-purchase agreements are at present covered by the law of contract, and a hirer who wishes to return the goods to the owner may find that under a minimum payment clause in the agreement which he has signed, he has contracted to pay the greater part of the total hire-purchase price of the goods whether he continues the hiring of the goods or not. The Bill proposes 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 the final payment is made and to return the goods to the trader from whom he obtained them by giving written notice and paying half the total purchase price on the amount due at the time of the termination of the transaction, whichever is the greater.
The payment of at least half the total purchase price affords reasonable compensation to the owner of the goods, the trader with whom the transaction was made, who is also under the Bill, entitled to recover any installation costs incurred by him in the deal. To ensure that no person through ignorance of the law, will be prevailed upon to forgo the right of returning the goods, it is provided in the Bill that any agreement containing a contracting-out clause will be void.
A common feature in hire-purchase agreements is a clause giving the owner of the goods, that is to say, the trader, by whom the goods are hired, the right to enter the hirer's premises and to seize the goods without further ado in the event of the hirer defaulting in the payment of the instalment. The effect of such a clause is that the person who has paid a considerable portion of the cost of the goods may, owing to his inability to pay an instalment, lose possession of all the goods without obtaining any credit for what he has paid.
It is presumably unavoidable that from time to time persons who have obtained goods on the hire-purchase system, should, owing to financial troubles, have to return the goods, but that is a different matter from permitting a trader to seize all the goods without compensation merely because an instalment is not paid. The Bill provides that any clause in a hire-purchase agreement providing for the entry of an owner on a hirer's premises to seize goods is void, and further, where one-third of the hire-purchase price is paid, the owner of the goods can regain possession only through the court. Where an application for recovery comes before the court it 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 the ownership of part of the goods to the hirer and return the remainder of the goods to the owner.
Where there is more than one agreement entered into by the same person, the Bill provides against the appropriation of instalments paid by the hirer under all the agreements in such a way as to deprive the hirer of the goods of his special rights under each separate agreement. Another possible 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 traders with an opportunity to dispose of inferior quality goods to persons in such circumstances buying them under hire-purchase arrangements, who when they find that the goods are unsatisfactory may also discover that the agreement they signed 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 warranties, quality and the like will apply to hire-purchase transactions as to ordinary, commercial transactions for cash. The Bill also aims at reducing law costs by providing that proceedings for the recovery of goods may be instituted in any district court if the hire-purchase price does not exceed £25. At present, proceedings cannot be taken in the district courts save in the Dublin area. It is proposed that Section 53 of the Courts of Justice Act, 1936, shall not apply in certain cases, thereby securing that proceedings in the district court against the hirer must be taken in the district in which the hirer lives or does business.
The Bill is not a long one and I assume that the Seanad, like the Dáil, will find little difficulty in approving of it in principle. It is probable that effective discussion of its provisions will take place in Committee, when the various sections can be considered and debated separately. The change in legislation which the Bill proposes has already been effected in the law in other countries and it is, I think, desirable that it should now be made here. Although hire-purchase transactions declined considerably in volume during the war years because of scarcities, it is to be assumed that they will return to pre-war dimensions, at least, and, probably, exceed pre-war dimensions when the period of scarcity ends. As I have said, the evidence available does not indicate the existence of widespread abuses here, but we cannot ignore the fact that widespread abuses are possible and did develop in other countries. It is desirable that we should take the necessary legislative steps to prevent such abuses from developing and that is what this Bill is designed to do. We must, however, ensure that, in taking steps to prevent abuses, we do not, at the same time, create conditions which would make it impossible for hire-purchase trading to be carried on. Hire-purchase trading is, I think, recognised to have social and economic advantages—and this Bill has been framed with the dual purpose of preventing possible abuses while, at the same time, facilitating the development of legitimate trade in that form. I recommend the Bill to the Seanad and I feel sure that, when we come to discuss its provisions in detail in Committee, it will be found that the sections are reasonably adequate to deal with known abuses and that the enactment of the measure will tend to put this form of trading on a better basis and enable it to develop without any bad consequences.