Is Bille tábhachtach é seo agus is céim eile é de pholasaí an Rialtais i leith cosaint do thomaltoirí.
The measure now before the House is intended not only to bring up to date the law relating to the sale of goods but to extend its provisions also to the supply of services. It also proposes certain significant changes in the law relating to hire purchase and it makes special provision for abuses such as demands for payments for unsolicited goods and for entries in directories. Thus it represents a major change in the law relating to consumer protection in this country.
In a number of respects it complements the Consumer Information Act, 1978, which was designed to ensure that the consumer would have protection from misleading advertising and misleading descriptions of goods and services. However, the present Bill is a more far-reaching measure than the Act of 1978. Both these measures, however, had their genesis in the report "Consumer Protection Law in America, Canada and Europe" prepared for the National Prices Commission in 1972 by Professor M.H. Whincup of the University of Keele. This report in turn provided the basis for the recommendations as to changes in consumer protection law made to the then Minister for Industry and Commerce by the National Consumer Advisory Council in December 1974. Between them, the Consumer Information Act, 1978 and the present measure account for almost all the recommendations regarding changes in consumer protection law urged by the National Consumer Advisory Council.
Before going on to deal with the provisions in the Bill, their purpose and their effects, I think I should endeavour to describe briefly, but I hope with reasonable accuracy, the principal features of the Sale of Goods Act, 1893, and the "implied" terms which are a feature of that Act and which are central to the revisions of the law in favour of the consumer now proposed.
As the law stands at present, the buyer of goods in a retail sale has certain "implied" rights by virtue of the Sale of Goods Act, 1893. These rights are "implied" in that they do not have to be specifically claimed by the buyer, either orally or in writing, whenever goods are bought. These implied terms are described in the Act either as "conditions" or "warranties". Breach of a condition entitles the injured party to repudiate his obligations and at the same time claim damages. Breach of "warranty" on the other hand entitles him only to claim damages for any loss incurred; the injured party has to fulfil his side of the contract. The legal meaning of the term "warranty" in this context is different from its common use as a synonym for guarantee.
The Sale of Goods Act is a carefully drafted codification of the law as it had developed by the end of the 19th century, and reflects the market philosophy of that time. Thus it recognises the freedom of both parties—the buyer and the seller—to make whatever agreement they wished, and, as the Whincup Report pointed out, the Act was intended to regulate the relationship of buyers and sellers only where they failed to make express provision themselves for such regulation. In short, the "implied" terms were intended to supplement, for the purpose of contractual arrangements, the agreement between the parties.
In keeping with the philosophy of the time, the Act presumed a general equality of bargaining power as between buyer and seller. Furthermore, the Act also provided under section 55 a means by which an economically stronger party may relieve himself of all liability for breach of contract.
As is well recognised both inside this House and outside, the 19th century commerical pragmatism which permeates the 1893 Act is, for several reasons, inappropriate in modern circumstances. For example, one aspect of the 1893 Act which has led to an erosion of the buyer's position is the regular use by many suppliers of the provision in section 55 of that Act whereby the seller can exclude his contractual liabilities to the buyer. I am sure that every Member of this House has, at one time or another, experienced the device of the exclusion clause. Its purpose and effects have been to trim or undermine entirely the implied rights of buyers. I propose in this Bill to curtail the use of such devices.
Another commonplace feature is the use of guarantees offered by manufacturers or traders, often in substitution for the legal rights which buyers would have had under the provisions of the 1893 Act. I propose to ensure that the basic provisions of this Bill cannot be whittled away; traders may offer better terms, but they will not get away with anything less favourable to the consumer.
From the background to and the need for the Bill I turn now to its general aims. These are:
(1) to bring up-to-date and improve the important provisions of the Sale of Goods Act, 1893 which set out the implied rights of buyers and conversely, the implied duties of sellers in a sale of goods;
(2) to remove certain anomalies in contract law which had operated adversely against the buyer, and allowed the seller to evade his proper responsibilities and to refuse to remedy faults;
(3) except in the case of title, to give to persons acquiring goods under hire purchase agreements the same legal rights—as to merchantable quality, fitness for purpose and others—now being made available to cash buyers; the logic of this approach is that hire-purchase is in substance—if not in form—a purchase;
(4) to extend to the buyer and the supplier of services, implied rights and duties somewhat analogous to those for goods;
(5) to improve the relief accorded by the law in the case of misrepresentation primarily by regulating the use of clauses excluding or restricting liability arising from misrepresentation; and
(6) to provide greater protection for persons who receive unsolicited goods, through the post or otherwise, and to regulate the methods by which entries in certain directories are collected.
The Bill has been structured so that associated provisions are grouped together to make it easier to identify those relating to specific areas namely: the amendment of the Sale of Goods Act, 1893; hire-purchase and services.
Part 1 brings together the basic provisions necessary in all statutes and sometimes dispersed throughout the text. Part II deals with the Sale of Goods Act, 1893 and contracts for the sale of goods and sets out the changes regarded as necessary to bring the law up-to-date. Part III sets out, in a self-contained way, the hire purchase provisions. All of these have been brought together in this part, even though some element of repetition of the text may appear to be involved.
Contracts for the supply of services are dealt with in Part IV and the question of misrepresentation in Part V. New provisions dealing with unsolicited goods and directory entries are dealt with in Part VI along with some remaining miscellaneous provisions.
As I mentioned at the outset, the Bill complements the Consumer Information Act, 1978, which is a criminal law measure of a generally preventive or regulatory kind, concerned to ensure that buyers are provided with reasonable and accurate information with which they can assess the options open to them when purchasing goods or services. Although there is a place for the general public in the task of enforcing the Consumer Information Act, such enforcement is primarily a matter for the Minister and for the Director of Consumer Affairs. The present Bill, on the other hand, is essentially a civil law measure designed to strengthen the position of the consumer in contract law, and thus is mainly a measure to be operated by the general public. There are, however, certain provisions which involve public authorities notably the Director of Consumer Affairs. Sections 11 to 13 and 46 to 54 of the Bill contain these provisions.
Earlier, I expressed the view that this was a complex and technical legal measure. Because of that, and in the interests of the fullest discussion on this Second Stage, I feel that it is necessary now to elaborate on the provisions in the Bill in a manner that, in another Bill, might be regarded as more appropriate to the Committee Stage. In doing this I will concentrate mainly on Parts II— sale of goods—and Part V—mis-representation. Parts III and IV—dealing with hire purchase and services respectively—are also very important but the changes in the law on sale of goods proposed in Part II are being extended in Part III to hire purchase and in Part IV to services. In that way Part II lays the groundwork and sets the style for Parts III and IV.
In general, Part II is concerned with improving the buyer's lot under the Sale of Goods Act and in certain areas of contract law. In the Sale of Goods Act the areas where change is necessary and is proposed are: sections 11 to 14, dealing with implied terms in contracts which are the heart of the matter; section 35, relating to acceptance of goods; section 53, relating to remedies for breach of contract; and section 55, relating to exclusion clauses.
As Senators will have noted, the Bill has been so structured that the amendments to the Sale of Goods Act are set out in the appropriate sections of the Bill in the form of tables which contain not just the revisions but the particular sections complete with revisions. This structure has the advantage that the revisions now being proposed in the Sale of Goods Act, can be seen in context. In that way the danger of what is termed "legislation by reference" is avoided. The fact that section 10 of the Bill deals with amendments to sections 11 to 14 of the 1893 Act does create some possibilities for confusion of reference, but as I mentioned in the other House the printers have, I think, succeeded in laying out the text in a way that reduces the possibility for such confusion.
Beginning with section 11 of the 1893 Act and with the question of acceptance, it has been held that injustice can arise for a buyer under section 11 subsection (1) (c) which provides that once the buyer has accepted specific goods, a breach of any condition which the seller should have fulfilled can only be treated as a breach of warranty and not as a ground for rejecting the goods. This seems to mean that a buyer loses his rights to reject defective goods at the moment of purchase. In accordance with the recommendations of the report of the NCAC, section 10 of the Bill proposes to change the basis for such an obvious injustice.
It is also desirable to ensure that acceptance, as defined in section 35 of the 1893 Act, is subject to the buyer's right to examine goods already provided at section 34 of that Act. Section 20 of the Bill contains the provision necessary to this end. A further aspect in regard to unsatisfactory goods and contractual commitment is dealt with in section 21 of the Bill. This amends section 53 of the 1893 Act in such a way that a purchaser who is a bona fide consumer will be able to reject faulty goods in circumstances where, under section 53 as it stands, he could only look for damages.
On the very important question of implied terms several amendments to the 1893 Act have been necessary. Section 12 of that Act, which deals with implied conditions and warranties as to title to goods is being amended to clarify the position in sales of limited title where a third party may have an interest. The benefits of section 13 of the 1893 Act, which provides for the implied condition that goods being sold by description must correspond with the description, are being extended so as to apply to goods selected off the shelf in a shop.
Section 14 of the 1893 Act introduced in statute form the concepts of "merchantable quality" and "fitness for purpose" as implied conditions to protect the buyer, but the Act did not attempt to define "merchantable quality" and did not extend to those who might be acting as agents, rather than dealers in goods. These weaknesses in the 1893 Act are being remedied in the Bill.
Section 22 adds several important new provisions to section 55 of the 1893 Act which is the section regulating exclusion clauses. The essence of the proposed new provisions is that the improved implied rights as set out in section 10 of the Bill cannot be, in any way, voided in the case of consumer sales by the use of exclusion clauses. Complete prohibition of exclusion clauses will apply in the case of consumer sales, but in the case of sales between business people there is provision in section 22 for a test of reasonableness to be determined by the courts in respect of exclusion clauses. This, I think, strikes a fair balance between the need, on the one hand, to guard against exploitation of the small man by economically stronger and more resourceful groups and, on the other, the need to allow reasonable freedom to strong groups to bargain with each other on whatever terms they please.
In making the various implied terms inescapable in contracts, it is also necessary to ensure that the provisions to that effect cannot be evaded in any other way and that, in particular, sellers cannot even claim or pretend to withhold them by notices or advertisements. I am sure that most Senators are familiar with the practice of some shops which display notices saying "goods not exchanged" or "no refunds". Section 11 of the Bill makes it an offence to put up such notices in shops. To make the provision in this section effective, it is proposed that breaches of it will be an offence. Section 14 of the Bill is intended to plug a loophole which at present sometimes leaves credit purchasers without any recourse where goods are faulty. The seller has been paid in full by the finance house and the latter have no interest except to recover the amount lent to the purchaser. Under this section the consumer will no longer be left in a vacuum between the two as both the seller and finance house will have joint and several liability.
Another important new area covered is that of guarantees which in recent years have played a prominent part in selling and which are badly in need of rationalisation. Any seller of goods now giving a guarantee will have to provide for the matters set out in section 16 of the Bill.
In accordance with the recommendations of the Whincup and NCAC Reports, special provision is being proposed in regard to the safety of motor vehicles. Unlike other goods provided for consumers, faults in motor vehicles may affect persons other than the purchaser—if, for instance, they cause an accident.
The need, therefore, for a high level of mechanical efficiency and road-worthiness in all motor vehicles sold for ordinary road use is vital. In addition to the safety angle, there is the consideration that, unless the buyer has some protection under a guarantee, the remedying of defects in a car following purchase can be very expensive indeed for the buyer.
The implied conditions and warranties provided in section 10 of the Bill as to merchantable quality, fitness for purpose and so on, will, of course, apply equally to sales of motor vehicles for ordinary road use. Under section 13, however, there will be an extra implied condition in such contracts to the effect that the vehicle is free from dangerous defects. If this does not prove to be the case, an aggrieved buyer will have an action against the seller for breach of contract.
In addition to this civil measure, section 13 also imposes a requirement that a motor vehicle dealer must give a written certificate to the effect that the vehicle is free from dangerous defect. The Minister will be empowered to specify the form of the certificate. This requirement should present no great difficulties to and indeed should facilitate the business of, reputable car dealers. It will, moreover, provide the buyer with much needed protection from the hazards he faces when tempted to buy from certain other kinds of car dealer.
Another innovation provided for under section 13 (6) is the extension of the right of civil action against the seller, to any person using the car with the owner's consent. There are those who might argue that this represents a serious stretching of the concept of privity of contract but, whatever the theoretical considerations involved, a pragmatic approach is called for when dealing with a product which, if defective, can constitute a grave personal and public hazard.
Senators will doubtless be aware that section 13 was the subject of extensive debate on all Stages of the Bill's passage through the Dáil. While I am satisfied that the section as amended in the Dáil represents a fair degree of consensus as to how the section should be, I, nevertheless, appreciate the concern of the industry and have received many representations regarding the scope of the section. I am, of course, anxious that the activities of any sector should not be jeopardised by this or any other provision of the Bill. Accordingly, I am arranging for further consultation with the motor industry before Committee Stage on the scope of the section as a whole. I shall be meeting the FIMI, together with some of my officials.
Of particular relevance, too, to car owners and buyers, as well, of course, as buyers of other so-called "consumer durables", are the provisions in section 12, under which any undertakings given by a seller as to future supply of spare parts and availability of servicing—sometimes given lightly as a seller device—may now be given the status of a warranty and can, therefore, be actively pursued in the civil courts by an aggrieved purchaser.
The new provisions contained in Part II in relation to the sale of goods are applied also, as appropriate, to hire purchase transactions in Part III of the Bill. The reason is that hire purchase transactions, although not sales in the legal sense, are a means by which consumer goods are acquired by consumers who are just as much entitled to protection as direct purchasers.
Similarly, Part IV extends the new provisions into the area of services where the consumer needs protection just as if he were buying goods. Nowadays, however, there is no reasonable basis on which suppliers of services should be exempt from implied terms as to the quality of the service. Indeed, one could argue that the need for adequate protection for a consumer is all the greater in the case of a service, because in a sale of goods the buyer can at least see and examine a given product. This is not generally the case with a service, however. Where the latter is involved, a buyer may well be purchasing an expertise about which he may know very little unless he happens to have a degree of technical or specialist knowledge that the average person does not have. The quality of services is more difficult to define than that of goods, but I think sections 37 and 38 go as far as possible in this regard. These provisions apply to all suppliers of services in their contractual relationships. In other words, the term "services" in this context extends to all those areas in which the consumer today spends much of his disposable income—leisure, holidays, personal requisites, house repairs and so forth.
As to Part V of the Bill, common law contains many mysteries for the ordinary person in the area of misrepresentation. I shall not go into the details of this here except to confirm that the purposes of sections 40 to 43 of the Bill are, firstly, to provide for the rights of a buyer where he has been led into accepting a contract by misrepresentation even if it was negligent or innocent and, secondly, in the interests of equity to enable the courts to maintain a contract, instead of setting it aside, and award damages, keeping in mind the nature of the misrepresentation and the loss that would be caused to the parties by upholding or setting aside the contract.
Part VI of the Bill deals with various ancillary matters which could not readily be classified with the other parts. The provisions about unsolicited goods and directory entries are very necessary. My Department has been receiving a good many complaints over the last year or two about firms soliciting payments for entries in directories which do not seem to exist. I will not go into the need for the other provisions in this part as they speak for themselves.
To conclude, it might be said that this Bill is about restoring people's rights in the market place, rights which, since the enactment of the Sale of Goods Act, 1893, have correspondingly diminished, as the market place itself has expanded in form, scale, complexity and sophistication. Its progress through the Dáil was marked by a spirit of genuine interest and co-operation on all sides and a number of amendments were made as a result of the discussions in that House. Even so, I recognise that there may be possibilities for further improvements and refinement as the discussion in this House proceeds.
I regard the measure as one where there is considerable agreement on all sides as to its need, its scope and its general provisions. Thus I look to our consideration of the Bill as a cooperative exercise designed to achieve the best possible text for what I have already described as a complex and technical measure in the legal sense.
Tá súil agam go gcuirfidh an Seanad fáilte roimh an Bhille seo, agus go mbeidh toradh fiúntach ar an scrúdú a ndéanfaimid air.