Select Committee on Enterprise and Economic Strategy debate -
Thursday, 28 Jul 1994

SECTION 57.

Mrs. O'Rourke

I move amendment No. 171:

In page 36, lines 5 to 8, to delete subsection (1) and substitute the following:

"(1) Before any hire-purchase agreement is entered into in respect of any goods, the owner shall state in writing the cash price to the prospective hirer, other than in the agreement.".

This provision has been redrafted for clarity purposes and there is no change in its intent. If the hirer has inspected goods or like goods with the cash price clearly displayed on tickets or labels attached to or displayed with goods,. or if the hirer selects the goods by reference to a catalogue, price list or advertisement which clearly stated the cash price for the goods, individually or as a whole, then the requirement to display the cash price will be deemed complied with. It mirrors section 31 of the Bill and it is considered important to make specific provision in the hire purchase area. The amendment is for clarification purposes only.

Mr. R. Bruton

I have no problem with the amendment. I understood that if a shopkeeper puts a price on a label that constitutes an invitation to deal. If the shopkeeper puts a wrong price on goods, that does not mean the consumer, having spotted the price, can claim the lower price as valid. The status of a labelled price was, therefore, not as categorical as this provision suggests. Will this create a curious precedent in that for cash purchasers the label carries no legal obligation but hire purchasers can take a different meaning from the label?

Mr. M. McDowell

I agree with Deputy Bruton. I remember from my King's Inns days that a label does not constitute an offer and one cannot simply go into a shop, give money and take goods on the basis of a label.

Mrs. O'Rourke

The label is only one item mentioned; this also applies to tickets, catalogues, price lists and advertisements which clearly state the cash price of the goods individually or as a whole.

Mr. R. Bruton

If the hirer has inspected the goods and at the time of the inspection labels were attached to the goods, clearly stating the cash price, under normal consumer law such a label is only an invitation to treat, so it does not bind the shopkeeper to sell at that price. That would apply to cash customers coming into the shop. Now, in respect of hire purchase, this invitation to treat will constitute more than is contained in existing law. It is not clear that the section as drafted deals with that issue.

Mrs. O'Rourke

We are satisfied that it does. It mirrors section 31 (1) (f) (ii), which requires the cash price to be stated in credit agreements. It follows the directive and it is considered important to make specific provision in this area in order that the consumer may, on original inspection, compare the difference in cost between purchasing by cash or by hire purchase. The section deals with hire purchase and we wanted people to be able to discern the hire purchase price and the price on offer, and make comparisons to decide between them.

Mr. R. Bruton

Yes but labels are not legally required to carry that.

Mrs. O'Rourke

The Deputy is saying the labelled price is not enough in that it is just an invitation to treat.

Mr. R. Bruton

Yes, it never had that status before.

Mr. M. McDowell

What is the Minister trying to achieve here? The price on the label may be too low. Having a label on the item may be as much as one can achieve. If the shopkeeper puts misleading labels on the goods they are likely to be misleadingly high rather than misleadingly low, because if the price is too low the HP agreement will look worse.

Mrs. O'Rourke

We are endeavouring to provide a choice so that people know the price of goods if they decide to purchase there and then and the price if they decide to use hire purchase.

Mr. M. McDowell

People are put fairly and squarely in command of the facts.

Mrs. O'Rourke

People are given the facts and they make a choice.

Mr. M. McDowell

One would not achieve much more than having a label, which is as good an indication of the price.

Amendment agreed to.

Question proposed: "That section 57, as amended, stand part of the Bill."

Mr. M. McDowell

As regards section 57 — I suppose this also applies to section 56 — is the idea of a credit sale agreement gone?

Mrs. O'Rourke

There is a hire purchase agreement and a consumer hire agreement.

Mr. M. McDowell

There used to be something called a credit sale agreement under the Hire Purchase Acts. When one was sold something, although it was paid for in instalments, it was an outright sale.

Mrs. O'Rourke

It was not an option to purchase.

Mr. M. McDowell

Does the Bill cover that?

Mrs. O'Rourke

It is not in the definitions.

Mr. M. McDowell

When reading the definitions, I wondered whether an outright sale with repayment instalments was covered by Part VI. I know it is a credit transaction.

Mrs. O'Rourke

Two definitions are dealt with in this and in the next section. Definition 25 relates to the consumer hire agreement and states: "‘the consumer hire agreement' means an agreement of more than three months duration for the bailment of goods to a hirer under which the property in the goods remains with the owner for the duration of the agreement". The definition of a hire purchase agreement is on page 10 of the Bill.

Mr. M. McDowell

Under the old Act there was a separate regime for credit sales. If I proceeded by an ordinary credit sale and said this was a sale of a washing machine, not a payment——

Mrs. O'Rourke

Not a consumer hire or a hire purchase agreement.

Mr. M. McDowell

——I lose out to some extent in that I do not have security over the goods. Does that mean I fall completely outside Part VI of the Bill?

Mrs. O'Rourke

We are dealing with hire purchase and consumer credit where one buys goods and pays cash.

Mr. M. McDowell

There can be a sale of goods but the property may be kept by the vendor until everything is paid. It is called a retention of title clause.

Mrs. O'Rourke

When one pays something off.

Mr. M. McDowell

One hands over possession of the goods because it is a sale, not a hiring agreement, but there is a retention of title clause. I wonder is that caught by this?

Mrs. O'Rourke

It does not appear to be.

Chairman

Leasing by arrangement.

Mr. M. McDowell

No, it is called a sale with retention of title. Will the Minister look at this on Report Stage to see whether we are creating an unnecessary division between two concepts — hire purchase and old fashioned credit sales?

Mrs. O'Rourke

We will look at that but it seems to have been subsumed into what we are now dealing with.

Question put and agreed to.

Section 58 agreed to.