I move amendment No. 21:
In subsection (4), page 16, line 20, to delete "who deals as consumer".
This is similar to other amendments. I presume the Minister is considering it.
Sale of Goods and Supply of Services Bill, 1978: Committee Stage (Resumed).
Section 29 agreed to.
SECTION 30.
Amendment, by leave, withdrawn.
Section 30 agreed to.
SECTION 31.
Question proposed: "That section 31 stand part of the Bill."
This is the general section showing how it is proposed to deal with the exclusion of implied terms and conditions. My initial remarks do not relate to exclusion clauses but relate to a problem that has been brought to my attention in relation to a very special class of hire purchase or leasing agreements. It has been drawn to my attention that aircraft leasing by Guinness Peat Aviation, which is a major Irish aircraft leasing company, and by Aer Lingus is always by way of an agreement which, on construction of the agreement, would fall within the definition of a hire purchase agreement and consequently comes within the terms of this particular legislation. There is a major difficulty involved in this because several of the obligations designed for ordinary hire purchase agreements would thereby have to be applied to this specialised type of lease. For example, one of the conditions or one of the clauses that always exists in aircraft leases, presumably for some very good reason, is a clause that at the end of the period of the lease the hirer or the lessee can purchase the aircraft for a sum that is not stated; it is a negotiated sum at the end of the term. Under this legislation there would be no obligation on the lessor, the leasing company, to specify the price one would pay for the aircraft at the end of the term of the leasing if one were to buy it out. This has just been drawn to my attention. They cannot unfortunately exclude them, because of the very effective way in which exclusion clauses are prohibited. For that reason I would ask that the Minister consider this matter.
I am quite prepared to put before the Minister the full details of the points that have been made to me. They are technical and, of course, one can imagine that very many of the other conditions that apply in the ordinary hire purchase agreement, if they had to apply to a specialised aircraft leasing agreement like this one, could cause all sorts of difficulties. For that reason I would ask that the matter be looked at. Perhaps on the basis of what I have said the Minister might be able to have some investigation carried out.
As the Deputy has indicated, this is an anomaly which has become apparent. I would be grateful for the information that is available to the Senator. As soon as we have it, we will look at it. If it is necessary to make an amendment, I can assure the Senator it will be brought in on Report Stage.
I presume it would be in order for me to raise this matter on Report Stage.
I can assure the Senator that when I have looked at it I will come back to him.
The matter may be raised on Report Stage by way of an amendment.
Question put and agreed to.
SECTION 32
Question proposed: "That section 32 stand part of the Bill."
I am wondering whether there is any justification at all for limiting the operation of section 32 to circumstances where a hirer is dealing as a consumer. We had a lot of discussion on earlier sections where we tried to make a hire purchase company or a finance company liable because they financed a deal. In section 32, if I read it correctly, we want to ensure that the supplier of goods is liable even where the actual purchase arrangement was between the hire purchase company and the hirer or purchaser. I know of many cases where hardship is being caused because of a supplier's ability to avoid liability under the Sale of Goods Act because he never sold the goods to the user of the goods and, secondly, he is not liable under the Hire Purchase Acts because he is not a party to the hire purchase agreement.
Whether he acts as a consumer or whether he acts in the course of business, a person who is an actual supplier of goods, regardless of whether the goods are sold by way of direct sale or hire-purchase, should remain to be liable and should be liable as a full party to the agreement. I ask the Minister whether he would consider removing the limitation in this section confining it to circumstances where a hirer deals as consumer.
In drafting the Bill it was our intention to go only as far as we have gone in this section. It is the first time that we have breached privity in this whole part. However, if the Senator or the House feels strongly about it, I will look at it and come back again on it on Report Stage.
I can understand that over the earlier sections where the situation was reversed difficulties could arise. We talked about the rights of indemnity that a hire purchase or finance house should have, but in these circumstances we have a three-way situation. Let us take, for example, the hire purchase of a piece of agricultural equipment such as a silage harvester. I had a case recently where a silage harvester was sold by a very reputable supplier of such goods. The cost was £20,000 and a hire purchase company financed the deal. The machine went seriously amiss, a lot of troubles were caused and my client was stuck in the position where he could not sue the supplier on the basis of the Sale of Goods Act or on the basis of the Hire Purchase Act. He could only sue the hire purchase company who actually arranged the transaction. The supplier is the person who induces the deal, who pushes it, and who is responsible for the equipment and he should be made liable. It is those circumstances that are affected by section 32. I would urge the Minister to consider amending that section.
This brings us back to the whole basis that we had in mind in designing this Bill to protect the consumer. We did not think it was necessary to go as far as the Senator is now suggesting. However, I have no objections to looking at it and I can assure him that I will look at it in a favourable light and will come back to him and to the House on Report Stage.
I accept that the Minister is there to protect the consumer but remember the Sale of Goods Act was available to everybody. We are repealing most of it and if we are only going to re-introduce the rights that existed in it to protect the consumer we are certainly taking steps backwards. In these circumstances there is a very strong case to be made for broadening it to all business deals.
I will look at it and I will come back on Report Stage.
Question put and agreed to.
Sections 33 and 34 agreed to.
SECTION 35.
Question proposed: "That section 35 stand part of the Bill."
This section is an attempt to try to define "antecedent negotiations" so as to bring section 32 into operation. Section 32 will not apply for the consumer's benefit against the shopkeeper unless there are antecedent negotiations. Then "antecedent negotiations" are defined by section 35 as meaning any negotiations or arrangements with the hirer whereby he was induced to make the agreement. In subsection (2) it provides that these negotiations can also be conducted by the servant or agent of that person.
A further paragraph in subsection (2) speaks of "representations" and attempts to define "representations". Politicians know well what representations are but not in this context. Is there going to be a very vague legal position created by this attempt to define "antecedent negotiations"? Would the words not be better standing by themselves in section 32 where they have a plain meaning according to the English language and where they could only be interpreted without getting into the area of attempting to define them? One of the conditions is that it was as a result of antecedent negotiations that the hirer was induced to make the agreement. I do not know whether it stretches things to envisage a situation where a shopkeeper would argue that the antecedent negotiations or the representations made by a servant were not made to induce the customer to buy but were rather made by way of explanation and were not necessarily designed to induce the sale. Is the subjective evidence of the consumer that because of the representations of the shop assistant he was induced to buy sufficient then to constitute "antecedent negotiations" to the purpose of invoking section 32? It is a difficult area and I can see the Minister's difficulty in trying to define it and reduce it to specific conditions. I suggest it might be safer to omit section 35 and rely on the plain meaning of the words "antecedent negotiations" in section 32.
What we have is a situation where it would be the consumer who would be induced and not the dealer. What we have set out here in section 35 is what we feel strongly is the best way to handle the particular end we are trying to achieve.
I quite appreciate the Minister's motive and I do not quibble with it. His motive is to make sure that the shopkeeper, as well as the hire purchase company, becomes liable to the consumer and he does that by saying that the shopkeeper if he conducts antecedent negotiations becomes liable; then the Minister attempts to define what antecedent negotiations can be. They mean negotiations whereby the customer was induced to make the agreement.
The question then arises as to what happened in a particular transaction if the transaction in question was as a result of something said by an assistant making representations in accordance with the later part of the subsection, not intending to induce an agreement but merely to give information. Whom does the court look to for discharging the proof of the words "whereby he was induced"? Does the court rely completely on the subjective statement of the customer that the shop assistant said this was a lovely washing machine when possibly he did not know or made a statement without permission, possibly in the course of employment? Would that relieve the shopkeeper or would the shopkeeper be held if the consumer just said he was induced thereby?
The last suggestion is the correct definition of what is intended in the Bill. Once the consumer feels he was induced, that is sufficient.
Does it not open the door to unscrupulous people if their subjective statement is sufficient?
He would have to satisfy the court.
If he has bought the article he has been induced. The confusion of the Minister will possibly make my point for me.
Question put and agreed to.
Section 36 agreed to.
SECTION 37.
Question proposed: "That section 37 stand part of the Bill."
Section 37 introduces a number of new implied terms in relation to the supply of services. For the first time in legislation we are going to have implied terms in contracts for the sale of services. The provision that the supplier will supply the service with due skill, care and diligence is probably already in existence in statute law as a result of the Moorecock case and it may be of a codifying nature, but a number of other cases have arisen down through the years since the Sale of Goods Act which have been ignored or overlooked in the implied terms proposed in this Bill.
Mr. Golding refers in his series of articles to the time honoured test of giving business efficacy to a contract. The courts have always implied a term in all contracts that business efficacy was intended by the parties. It would have been appropriate in this Part of the Bill, where we bring this area of law into our Statute Book for the first time and where we are codifying some existing case law, that this should have been introduced. I should like to ask the Minister whether he would consider extending the provisions of section 37 that effectively imply these new terms to include terms that the court implies with regard to business efficacy in contracts for the supply of services?
We have suggested the basic terms in common law that the courts have decided. It is not our intention to go any further at this stage.
I admire what is being done here. It is a good idea but it seems that the one term that has always been implied by the courts for very many years has been overlooked. I do not know whether there was a reason for that. I thought that there genuinely was some reason for it but I would ask that it would be looked at again. If there was not a reason against it, there is every reason why it should be included because it is a term which is always implied by the courts in contracts like this and there is a good case to be made for it to be included.
Business efficacy may not be the last term that has been implied. There may be other terms that have been implied by the courts as well. Where do we stop?
This is a very fundamental point. I would ask that the matter be looked at.
I am grateful to the Senator for the welcome that he has given to this Part of the Bill. We are very happy to see legislation being extended in this way.
Regarding the effect of it, in a situation where the supplier of the service is somebody in a consultant capacity, possibly a consultant in the engineering field supplying services to a practitioner in that field, I take it that section 37 would apply to that consultant but that under section 38 it would be open to the parties to exclude section 37.
It would, if it were reasonable.
By analogy then, a member of the Bar advising a solicitor would be subject to section 37 unless it were excluded between them.
Yes. They can exclude it between them.
In the absence of an exclusion it would be there. Section 38 which deals with exclusion mentions that the exclusion can be by express term or by usage. There is a long-standing position in the legal world, and I suppose usage would be the word intended to cover it, that barristers cannot be sued. Would that be a usage that would exclude the action of section 37 in that situation?
The court may well hold that.
What would the Minister like the court to hold? The court, of course, is not bound to heed the Minister's views.
That the barrister would not be sued.
Is it the Minister's intention that the present position as between barrister and solicitor would be unchanged?
Yes, that it would be unchanged.
Perhaps some of the barristers in the House might be able to assist us in that. All I know is that it has not been open to solicitors in the past to sue barristers for professional negligence. This arises simply because the solicitor is acting in the course of business in consulting counsel but where, for example, a member of the Bar advises a member of the public directly, is it not the case that he could be sued because then the recipient of the advice is dealing as consumer in relation to this service?
Subject to the criterion of fairness and reasonableness.
What is not fair and reasonable? A business arrangement is fair and reasonable. Am I correct?
If it is fair and reasonable under section 38.
Is not that only where it was a business situation, where there is a consumer situation?
No.
Given that that is the case, we have never seen the circumstances in which members of the Bar have to put exclusion clauses at the bottom of their opinions.
It is not my intention that they should.
They conceivably might have to. I am not saying that this is necessarily good or bad, I am just trying to tease out what the situation is or is likely to be. Maybe by usage there is an exclusion clause between solicitors and members of the Bar but if a member of the Bar were to advise a member of the public directly, dealing as consumer the person draws these implied terms into being. It is hard to see any exclusion clause. Even if there is no exclusion clause in existence the member of the Bar can be sued, unlike the situation that exists at the moment. I should like the Minister to clarify the position.
Yes.
It is a very substantial change in the law. Is it the Minister's intention that this should be the case?
Yes.
On a point of consistency or inconsistency, we have gone to great ends in section 13 to control roadworthiness of cars where they are supplied by motor dealers or whatever. Was it considered that where somebody provides a service in relation to a car there should be a term implied that the car would be roadworthy thereafter? If somebody overhauls an engine or does a major service job on the brakes of a car, or something like that, there should be a term implied that the car would for some reasonable period thereafter be roadworthy. We had no objection in section 13 to the implication of a condition. Our objection, the Minister will recall, was to the certificate and to the possible criminal liability. To be consistent in relation to the supply of services there should be implied a term as to roadworthiness. Was the matter considered?
The implication in section 37 is that the service would be provided with skill and care and that is as far as we thought we should go at this time. We are not suggesting that this is the end of the road as far as the services sector is concerned. What we are doing is taking a first tentative step along that road and there will be many changes in the future but we thought that at this particular stage we had gone far enough.
I accept that. We are not that dramatic in what we are doing. Much of the content of these terms has already been implied by the courts in case law. This is partly codifying existing laws; it is partly innovative as well but when we extracted cars and motor dealers for particular attention in relation to the sale or the hire purchase of vehicles, why did we not do it in relation to the supply and service of vehicles? Frequently problems of this nature arise. I accept that there is an implied term that the supplier has the necessary skill to render this service. That applies to every contract just as the implied terms for sale of goods or hire purchase apply to everything. But in relation to the sale of goods and the hire purchase of goods motor dealers were taken out for very special consideration. To be consistent motor dealers also supply a service in relation to vehicles and why not imply a condition of roadworthiness there?
But surely there is a condition of roadworthiness if the car is left in——
There is not a separate condition as there is in section 13.
——for service and, under 37(b), that he would supply the service with due skill, care and diligence. If the motor is taken out and there is an accident and it is proved that it was due to faulty brakes or something else because of ineffective service, due skill and care would not have been shown in the service and consequently there is a case there. It is covered under that.
I am, perhaps, inclined to agree with what the Minister is saying in that regard and I would ask him to apply the same arguments to removing and changing the subsections of section 13 that we asked him to change because it shows just how irregular is that whole matter of section 13, that certificate and all those requirements. If the thinking behind this was consistent it will come up here again.
It is perfectly consistent.
Conditions and warranties have disappeared in this section. They appear scattered throughout the Bill. Many lawyers in the past, and I am sure consumers as well, if they understood what they were talking about, would have liked to have seen the distinction between conditions and warranties disappear. In this part of the Bill it disappears or submerges to re-emerge again in the next part. But we refer only to terms here. Are these terms conditions or are they warranties?
We are anxious to avoid creating artificial differences. Warranties and so on go back perhaps for 100 years. We are introducing a new sector here in the services side rather than the sale of goods and we did not see a need to re-create these artificial differences in a new complete section. They are there long enough and we do not want to re-create them in a new section as well.
I agree. Is it not possible to refer only to terms in the other parts of the Bill? I have not enough competence to discuss a major question like that but it seems a good idea if we could do away with the distinction altogether.
I would agree with the Senator that it is a very good idea but it is so fundamental and so basic that it just would not be appropriate in a Bill such as this to start interfering with basic fundamentals of that order.
Question put and agreed to.
SECTION 38.
Government amendment No. 22:
In subsection (6), page 18, line 40, to delete "Tourism and".
This amendment has already been discussed in conjunction with amendment No. 2.
Amendment agreed to.
Section 38, as amended, agreed to.
Section 39 agreed to.
SECTION 40.
Question proposed: "That section 40 stand part of the Bill."
This is not agreed. I have indicated my opposition to these sections in Part V. I have read a little about the area of law we are concerned with. I have already, on Second Stage, made the point which I think is the major and primary point to be made about this Part of the Bill and that is that here we are indulging in something from which our entire State structure and our entire Statute Book suffer and that is patchwork. Unfortunately, it is the case that our law of misrepresentation badly needs updating. To go about it in the piecemeal way of changing the law in relation to the sale of goods, supply of services and hire purchase transactions is to put off the work that we should be involved in right now and that is changing the law of misrepresentation right across the board. Even given that in some years time or decades time or whenever we get around to doing it we do change the law of misrepresentation, apart from the parts we propose to change now, we are going to end up in a situation where the law of misrepresentation as it relates to particular contracts such as the supply of goods, sales and services and hire purchase agreements would be contained in this Bill which does not refer to misrepresentation in its main Title. It does in the title of this section but the law as it relates to contracts for the sale of land and other contracts will exist somewhere else. I think that is bad practice. It is something to be avoided and it is something that could have been avoided.
It is difficult sometimes to sit back and research law so as to introduce amending legislation that will cover an entire field but we have borrowed verbatim from English statute what they have done and we have applied it solely in these areas. Instead, if we wanted to do it we should have taken the entire English Act and re-introduced it here and at least we would have changed the law of misrepresentation as it applies to all contracts and not just the limited type of contracts we are dealing with here. I know the Minister has views on this. He mentioned them on Second Stage. I know his view is simply this is what we are doing, how we are going about it. I accept his position but I think it is indefensible, unnecessary and something we will regret. It is something that keeps on happening over almost everything that we go about doing. We have it in relation to family law; we have it in relation to children and the law; we have it in relation to the sale of goods and in relation to company law. Everywhere we go there are bits of law here and bits of law there. We are losing an opportunity to put the law of misrepresentation and contract in one single basket. We should have done it without effort. All we had to do was copy more sections from the English Act than we have done for this Bill. That is the first point I want to make in my opposition to these sections.
The second point I want to make is that in borrowing, or taking, or copying as we did from the English statute, we managed to look at what they did in 1967 in their own Act but we did not look at one iota of experience they had had of that statute since then. Since that statute was passed in England in 1967, several flaws have appeared in it. They are not flaws that I am mentioning as a lawyer, ones that occur to me, case examples that I know of; they are flaws that have been considered by academics. They are flaws that have been considered by practitioners. They have been written about and spoken of. We have completely overlooked that in relation to almost every single section.
In relation to section 41, misrepresentation arises. We do not define what misrepresentation is. That has been seen to be a flaw in the English Act. In relation to the next section, the same problem arises in relation to the definition of misrepresentation. Problems arise as to how damages are to be assessed. Problems arise as to what is to be a misrepresentation, whether silence constitutes misrepresentation. We have not just taken the original English decent version but the original English bad version as well and we have failed to benefit at all from their experience.
What I want to do, if I may, is read into the records of this House an extract from Cheshire and Fifoot which is a very excellent book on the law of contract. It is a standard work and perhaps the points raised could be considered. I ask that in relation to amendments of these sections, but I ask the Minister to bear in mind that I would prefer that this be taken from this Bill altogether and put in another one which we could pass here on the very same day as this Bill is being passed, because we would have no further questions arising on it, and let it affect our entire law of misrepresentation across the board.
In any event, I am quoting from Cheshire and Fifoot, The Law of Contracts, the 9th edition which was published in 1976; that is just six years after the passage of the 1967 English Act. The quotation is from page 276. It is headed “Review of Effects of Misrepresentation Act 1967.” I want to say that for the convenience of the Members of the House his reference in the articles in the book from which I quote, sections 1, 2 and 3, may be read as sections 41, 42 and 43 as they apply to our Bill, and I will refer to them—if I remember—as sections 41, 42 and 43 as I go along.
It is not in order to make lengthy quotations. The Senator may make short quotations.
I can quote the first couple of paragraphs in relation to the first section and the second and third couple of paragraphs in relation to the next section and I shall not be in breach of any rules. I would prefer to do it this way. It makes more sense this way and I think it will save time on discussion on the other sections. It is mainly the one point.
We will rely on the Senator's discretion on this matter not to make it too lengthy.
It begins:
Our discussion has involved very frequent references to the Misrepresentation Act 1967 but perhaps it is worthwhile now to attempt to look at the Act as a whole. Although there can be little doubt that the general effect of the Act will be to improve the lot of representees as a class, this has been achieved at the cost of making an already complex branch of the law still more complicated. At least three factors have contributed to this. The first was the general policy decision to proceed by a limited number of statutory amendments to the common law. This means that the Act can only be understood if the previous law has been mastered and since the previous law has been mastered and since the previous law was often far from clear the Act has been erected on an uncertain base.
Secondly, the Act was based on the view of the common law taken by the Law Reform Committee in 1962 which was overtaken by the decision in Hedley, Byrne and Co. Ltd. versus Heller & Partners. This has meant the creation of two different kinds of negligent misrepresentation with different rules and an uncertain relationship.
Thirdly, these defects in approach were compounded by drafting which is frequently obscure and sometimes defective.
An important example of the type of problem created by the Act is the meaning of the phrases "after a misrepresentation has been made to him" (which occurs three times in sections 41, 42 and 43) and "any misrepresentation made by him" (which occurs in section 43). The Act does not define "misrepresentation" and the question has been raised whether these words are apt to extend to situations where the law imposes a duty of disclosure. It would seem reasonably clear that the Act extends to those cases where silence is treated as assertive conduct, as where it distorts a positive assertion made by the representor or where the representor fails to reveal that an earlier statement made by him is no longer true. It is much more debatable whether the word "misrepresentation" is wide enough to cover cases of nondisclosure stricto sensu, such as contracts uberrimae fidei, but even here, it might be argued that failure to disclose the existence of a material fact is equivalent to affirmation of its nonexistence. Similar difficulties may arise from the failure to define the meaning of “rescission” in the Act.
We have already dealt at length with the effects of section 41 and 42 of the Act. Both are concerned to improve the representee's remedies for misrepresentation, section 41 by removing possible limits to the right of rescission and section 42 by widening the possibility of obtaining damages.
I may stop there for a moment and sum up the basic points that are involved. The failure to define misrepresentation leaves a great doubt as to what will or will not constitute a misrepresentation. That has already caused difficulty. The whole law of misrepresentation is riddled with difficulties and uncertainties at the moment, and the failure in the English Act to define misrepresentation has now been found to have been a major flaw. The same problem arises in relation to failure to define what is meant by rescission. I would again like to refer to the view of the authors of that book that the piecemeal amendment of the common law was something that was most undesirable. We are going a lot further than that. They were amending all their misrepresentation law and even at that it was found to be inadequate because they did not codify existing law because they did not clarify a lot of points that were unclear at common law and as a result of case law. Here, now, we are going further than that. We are not just being piecemeal in the sense that we are confining ourselves to the ambit of the English Act; we are confining it just to two or three types of contracts, namely contracts for the sale of goods, the supply of goods and hire purchase.
The second major point that I want to make and to quote again from Cheshire and Fifoot in relation to this part of the Bill relates to the exemption clauses and perhaps it would be more appropriate if I left it until we have reached section 44.
It seems to me that Senator Molony has made a very good case for not attempting to codify the law of misrepresentation across the board as he suggested. He has told us the difficulties which arose when an attempt in that direction was made in another jurisdiction and the trouble they ran into. It seems, if anything, that a great deal of his argument seems to be to the point that it might be better to do this in each area as it arises because of the difficulty of introducing an Act that would cover all forms of misrepresentation.
I do not think I could agree at all with what Senator Ryan said. If you take the basic point of misrepresentation what constitutes a misrepresentation? I do not think the fact that this is limited just to three types of contracts solves that problem in any way and perhaps if misrepresentation were defined and we knew exactly what we were talking about it would be easier. It may be easier, in other words, to define misrepresentaton in relation to these particular types of contracts but we do not do that. I do not think the fact that this is limited just to three types of contracts solves that problem in any way and perhaps if misrepresentation were defined and we knew exactly what we were talking about it would be easier. It may be easier in other words, to define misrepresentation in relation to these particular types of contracts but we do not do that. Now, if we did that, we might overcome that difficulty. But I, would ask Senator Ryan to consider my general point. Misrepresentation is a matter of contract law and it is a major section of contract law and it seems to me to be better, if we are going to tinker with that in our statutes at all that we should do it in one statue. Perhaps within that statute we could divide it into various areas. I do not know whether that would be the best approach. I am sorry to see that it is in the Act at all. I would take Senator Ryan's point if we were to define what we meant by misrepresentation.
I would like to point out to Senator Molony and to any other Senators who have not expressed views but might have some doubts on this particular rationale for dealing with misrepresentation in this way, that sections 40 to 43 tidy up the law of misrepresentation in relation to the matters that are germane to the Bill and represent important improvements in the position in these areas whether one is a consumer or acting in the course of a business. Further, while it might be desirable to revise all the legal aspects of misrepresentation, it would be far outside the ambit of this Bill and, in particular, of my Department. I believe that we would be failing to serve the public interest if the important area of misrepresentation was set aside in our deliberations on the revision of the statutory position of the law of contract.
With regard to allegations that a problem will be created by the lack of a definition of misrepresentation and—if I could anticipate—of "rescission", following some legal advice on this question which I requested I do not envisage significant difficulties arising from the failure to define misrepresentation or rescission in Part IV and both these terms will retain their common law meaning.
The question has been asked whether the words "after misrepresentation has been made to him "and" misrepresentation made by him" which occur in Part V are apt to extend to situations where the law imposes duty of disclosure. I am satisfied that they are apt to extend to such situations and the absence of a definition of misrepresentation should not create any problem in this regard.
The general common law rule is that mere silence is not misrepresentation. Silence will constitute misrepresentation in these cases. One of these cases is where the contract requires uberrima fides, one party must make full disclosure of all material facts known to him. An example would be contracts of insurance. The fact that a party remained silent and did not make full disclosure in such a contract would mean that a misrepresentation had been made for the purpose of Part V of the Bill. He would therefore be caught thereunder.
My advisers are familiar with Cheshire and Fifoot. The other main source, Anson's Law of Contract, while commenting critically on some parts of the 1967 Act nevertheless does not overall take the same view as Cheshire and Fifoot. Indeed it answers the points made by Cheshire and Fifoot.
These text books that we are talking about are of necessity English. Most standard works on common law are English; certainly it is the case in relation to this contract law. Some of our own very learned university professors and academics seem to subscribe to Cheshire and Fifoot's arguments. Mr. Golding whose series of articles we referred to on several occasions in the course of the debate on this Bill certainly takes that view. In those circumstances I would ask, with every respect to the Minister's own legal advisers, that the matter be reviewed again. The comment on the English Misrepresentation Act has been so—generally speaking—unfavourable and because of problems it had created, we should consider very carefully before we jump into the same boat.
I can assure the Senator and the House that this matter was considered very carefully before it was included in the Bill. I would reiterate the point that I made earlier that what we have here represents important improvements in the position of buyers.
I am not against the improvements.
As far as extending the whole misrepresentation matter and bringing in a complete new misrepresentation law is concerned, that would be far outside the terms of reference of this Bill.
That is a different point. That is the initial point I would make. The English Misrepresentation Act is a tiny Act. It is imperfect but it is not fair of the Minister to suggest that that Act of that size could not be managed in so far as all our contract law is concerned. It should have been considered. However I will take the Minister's point and will not say any more about it but when we are going about changing the law, we have made the mistakes that have been made across the water and we made no effort to deal with them at all, good, bad or indifferent. It is a bad mistake and we should be able to do something about it.
I do not accept that we have made mistakes by including it. As far as the general review of the whole question of misrepresentation in all its applications is concerned—perhaps that should be looked at again. If we did not include misrepresentation as we have included it in this Bill there would be a serious gap in the Bill and that is something that I would not be able to stand over. As regards the defects mentioned by the Senator, I will look at it but that is giving no guarantee whatsoever. At this stage my view is what we have here is perfectly correct, but in the light of the points made by the Senator I am prepared to consider it again.
Question put and agreed to.
Section 41 agreed to.
SECTION 42.
Question proposed: "That section 42 stand part of the Bill."
Is there any measure of damages envisaged by this? There is no test provided for. I wonder has the Minister any specific ideas on the type of damages a court should award.
I will attempt to read my legal advice on this matter. It is to the effect that under section 42 (1) the measure of damages for negligent misrepresentation including remoteness of damages is the same as that in the tort of negligence and in consequence will be governed by the out-of-pocket rule. This means that the injured party will be entitled to an amount which serves to put him into the position in which he would have been had the representation never been made. He would not be entitled, as he would be on breach of the contract, to recover the loss of bargain, that is to say, an amount that served to put him into the position in which he would have been had the representation been true. On the other hand, he can recover in respect of consequential damages such as injury to his personal property. The measure of damages to be awarded under section 42 (2) would be the loss suffered by the representee as a result of refusal to allow rescission of the contract. This, in a contract of sale of goods, for example, would be the purchase price of the goods less their value at the date of trial of the action. It is pertinent to stress that damages under the subsection are given in lieu of rescission. In the case of innocent misrepresentation therefore, Part V does not disturb the rule that financial relief of consequential loss should be limited to an indemnity.
In assessing damages under section 42 (2) therefore, the guiding rule would be the procedure as nearly as may be to secure the same effect as could be obtained by rescission plus indemnity and not to recoup consequential loss which would fall outside the limited relief.
May I ask the Minister for his authority for this? I know that is legal advice but where does it say in this section that damages are to be assessed under this section in the same way as damages are assessed in a negligence matter?
It does not say it but there is a combination of common law rules.
A common law rule that will govern the method in which damages provided for in a statute will be assessed?
Our information is, yes.
I will check it again but the implication in the information that I have received is that that is incorrect.
Legal advice is legal advice.
Question put and agreed to.
SECTION 43.
Government amendment No. 43:
In page 19, line 30, to delete "passing" and substitute "commencement".
Amendment agreed to.
Question proposed: "That section 43, as amended, stand part of the Bill."
It is agreed but I want to make some general points. This is the section that deals with exclusion clauses. Rather than pretend that any of these points is originally my own I will, if I may, resume my quotation from Cheshire and Fifoot on the subject. I have not looked at Anson in the meantime but I think in relation to this section that even Anson would have some words of caution to offer.
First of all, it should be said that section 43 of this Bill is the very same as section 3 of the English Misrepresentation Act. There is no need for me to go through the section itself. Cheshire and Fifoot, page 278 of the same edition I quoted from earlier, says:
This section again goes beyond the Law Reform Committee's recommendations which would simply have barred the exclusion of liability for fraudulent and negligent misrepresentation. The section does not go well with the rules relating to clauses excluding liability for breach of contractual terms since, as we have seen, there is no general power in the court to strike down such clauses. It seems probable that in the fullness of time there may be legislation to deal with such clauses but meanwhile the position is inelegant and indeed irrational. Even worse, this approach has aroused doubts as to what in fact the law is. Thus it may be argued that section 3 invalidates in toto a clause which purports to exclude liability for both misrepresentation and breach of a contractual term. Furthermore it is often arguable whether a statement is properly classified as a term or a representation and, as we have seen, there is no clear decision as to whether it is open to a plaintiff to treat a contractual term as a representation. If this is permissible, a plaintiff may by formulating his claim in misrepresentation, deprive of effect a clause which would have excluded liability for breach of contract.
I should like the Minister to take particular note of the next paragraph:
If there should be legislation dealing with the general problem of exemption clauses, section 43 offers a model to be avoided. although it is clearly aimed both at clauses which exclude liability and at those which restrict remedies, it contains no definition of its ambit in either area. Yet it is well known that the line between clauses excluding and defining liability is very fine and such common commercial occurrences as non-cancellation or arbitration clauses would seem to fall within the literal scope of (b). These difficulties are well illustrated by Overbrooke Estates, Ltd. v. Glencombe Property, Ltd.
In that case the plaintiffs instructed auctioneers to sell a property, the particulars of sales stated that "neither the auctioneers nor any person in the employment of the auctioneers has any authority to make or give any representation or warranty." The defendants, who were the highest bidders at the auction, alleged that three days before the auction, they had asked the auctioneers questions about the development plans of the local authorities, to which they had received inaccurate answers.
Brightman, J., held that even if the defendants could prove these allegations, they would constitute no defence. It was clear that the defendants had the particulars of sale and therefore knew or ought to have known that nothing told them by the auctioneers could bind the plaintiffs. Section 43 of the Misrepresentation Act was irrelevant since the provision in the particlars of sale did not constitute an exemption clause, but was a limitation on the apparent authority of the auctioneers. This decision appears impeccable but one may suspect that if the draftsman had foreseen it, he would have proceeded differently.
Perhaps the most serious criticism should be directed however at the very wide discretion which is conferred on the judge since no guidance is given on its exercise. It may often be difficult for the court to decide whether a particular clause is reasonable since this may depend on evidence relating to the public interest which will not have been given.
That is what Cheshire and Fifoot has to say about the exemption clause, or section 43. If a model were to be chosen to deal with it, this certainly was not the one to pick. The case I quoted from is ample evidence of the difficulties that can be caused by the section. There is the point of whether something said is a term or is a representation. The other point is the distinction of whether the purpose of an exemption clause is to exclude liability or to define the remedy that is available. For example, a very common type of clause that we see in business contracts nowadays is a clause that provides for arbitration in the event of a dispute arising out of the contract. That clause which provides for arbitration restricts a party to the contract in their remedies. But it can be made as an exclusion clause because it does restrict the rights of the person who wants to move afterwards whether through arbitration or in court. This section does nothing to assist one in deciding whether an arbitration clause is an exemption clause. It can be read as an exemption clause. That problem has arisen in England and they have not been able to deal with it and we are losing the opportunity to deal with it here. It seems to me that, in relation to arbitration clauses, arbitration clauses should be allowed to stand but because of the uncertainty I believe that if a lawyer were advising a client on a commercial contract that might raise problems in this area, he should advise a person to leave out any reference to arbitration. Arbitration is a very good idea in terms of efficiency of dispute resolution.
This whole section was looked at by the UK authorities in the light of their experience of the Act and I agree with the point made by Senator FitzGerald on Second Stage that with their vast experience and their vast case law and very detailed and complicated law that we should, as far as possible, follow their example. I see nothing improper about that and in fact, I am totally in favour of that principle. The only change that was made in this section in the UK legislation following the 1967 Misrpresentation Act was that portion included in the Unfair Contract Terms Act, 1977 in which section 8 amended section 3 of the 1967 Act by the substitution of "contract" for "agreement" and "term" for "provision". Also, it improved the criteria for determining reasonableness. We have already done that. However, the Senator feels strongly about this matter. I am not sure how the remainder of the Members of the House feel about it. I would remind the Senator with regard to his source of Cheshire and Fifoot, that my counter arguments have been put up by counsel.
Not very many.
There have been counter arguments put forward. As I have already said, they are the other main source. If I have an opportunity between now and Report Stage I will look at this matter, which was the whole object of the type of examination laid down by my predecessor. I would again bring the Senator and the House back to the point that this is a non-controversial piece of legislation and that we are very anxious as a Government to see that when it leaves this House it will be as near perfect as we can get it. I am prepared to look again at this point made by the Senator and refer to it on Report Stage. I am not saying I shall accept the point, and on the surface I do not feel that I shall be accepting it, but I shall look at it and we can refer to it again on Report Stage.
I accept what the Minister has said. May I ask him one question? In relation to an arbitration clause, is the Minister satisfied that arbitration clauses will stand and be left unaffected by that section?
Yes.
As simple as that?
Yes, as simple as that.
I gather the Minister's advisers have studied the points made in Cheshire and Fifoot. Perhaps, the Minister could give some indication as to why Cheshire and Fifoot is so wrong in what it says about this? It is a very eminent and widely respected legal textbook. I have not seen Anson. I shall look at it but I would like a specific answer to my question.
I am not suggesting that Cheshire and Fifoot is wrong.
Could I have some answers, to satisfy my own curiosity?
The legal advice is contrary to the points made by Cheshire and Fifoot. As I have said, we shall go through this again on Report Stage. I shall get specific answers for the Senator on Report Stage.
I should like a specific answer on the arbitration point.
It would be as well if they would be in the records of the House also.
I should be very grateful for an answer on the arbitration point.
I feel that it would be preferable to give quite a specific and detailed reply on Report Stage, rather than the inadequate reply which I would be in a position to give now. I should prefer to be in a position to give a full, detailed reply on Report Stage.
I do not know whether it is in order or not, but the idea of Committee Stage is that we should have this information now, so that we can consider it by Report Stage. I do not want to ask for information that the Minister may not have immediately at his hand but perhaps the Minister could communicate with me in the meantime, if that were in order, so that I might consider the matter as well. I presume the whole idea of a Committee Stage is that there can be an exchange of views and opinions and consideration of the various matters before a decision is taken on Report Stage.
I do not think the Senator could suggest that I have been unreasonable.
No, I do not suggest that at all.
I would be quite prepared to discuss the point with the Senator before we find ourselves in the House. I want to clarify that we are now discussing section 43 and it is that section that I shall be coming back on. Sections 41 and 42 are agreed. It is section 43 that I shall be discussing with the Senator.
I thought the Minister was going to consider some of the points that I made on section 41.
I shall consider them.
In relation to those sections, I separated the issues because there were two aspects of misrepresentation in question. I think the Minister had already said that he would consider some of the points.
As I have already said, the Senator has not found me unreasonable in the discussion of this Bill. We shall have a number of weeks to look at the Bill before we come to Report Stage. I am quite willing to discuss the matter with the Senator.
Section 43, as amended, agreed to.
SECTION 44.
Question proposed: "That section 44 stand part of the Bill."
One of the more scandalous practices that go on is the quantity of unsolicited goods and literature that comes through one's letter box.
Question put and agreed to.
Sections 45 and 46 agreed to.
SECTION 47.
Question proposed: "That section 47 stand part of the Bill."
Perhaps the Minister could explain to us the purpose of section 47?
The intention behind this section is to enable the Minister to provide for a cooling-off period in contracts. An order under this section may be applied to all or any of a contract for a sale of goods, hire purchase agreement or a contract for the supply of services.
Question put and agreed to.
Section 48 agreed to.
SECTION 49.
Question proposed: "That section 49 stand part of the Bill."
I have a note here, "Why does this not include sale of goods and hire purchase agreements?" This is a notice which gives the standard form of contract. Perhaps I am wrong in my note?
Because service is where we feel there is most abuse of the standard form of contract.
The Minister does not feel that there is any necessity to control this in relation to the other areas?
We do not feel that there is a need for this.
I make the general point I made on the section with regard to the supply of spare parts. The Minister may feel at the moment that there is no necessity for him to stipulate regulations as to the use of the standard form of contract but what he is doing here is merely taking power to introduce later, by order, regulations in relation to standard forms of contract. It may not be as widespread a problem in relation to sale of goods as it is to supply of services. I do not see why the Minister should not take the parcel. If a problem does arise in future, he is not going to introduce an Act of Parliament to give himself the power. We are great at providing for delegated legislation, but not so much in areas where we should provide for Ministerial power. I welcome this type of provision. It should apply to all types of contracts that we are concerned with here.
I see no reason why we should not extend it. The point is that when introducing it we thought there was no need for it. I have no strong objection to it if the Senator or the House feels strongly about it. We shall look at it.
I would ask that it be extended.
Question put and agreed to.
SECTION 50.
Question proposed: "That section 50 stand part of the Bill."
This brings me back to section 13. Section 50 provides:
The Minister may by order prohibit ....any seller of such goods or supplier of such services in the course of a business from making use of any printed contract, guarantee or other specified class of document unless it is printed in type of at least such size as the order prescribes."
We had great talk on section 13 whereby the contents of this new certificate will be governed by a creature called "regulations" that does not have to come before the House. The reason given when I queried the matter was that this was a technical matter which need not be of concern to Senators. Here we have in section 50 an order that must come before the House in relation to the size of print of standard forms of contracts. There may be a specific reason why it was being provided in section 50 that it was to be established by way of order rather than by way of regulation. It seems to be a matter eminently suited to be dealt with by way of regulation. Under section 13 in relation to an extremely controversial type of certificate, regulations are in order. It would certainly be controversial that the matter should be introduced by way of order rather than by regulation.
If the Senator suggests that we do it by regulation, I am quite willing to change it to regulation rather than order.
I am merely asking the Minister to be consistent in his argument. This is a flip of the coin, whether the print be the size of a penny, the size of a half crown or the size of a farthing. In the areas in relation to the sale or the supply of services, barristers' opinions will have to be sought as to the type to be used. That is something that could be dealt with by way of regulation. If there is no good reason why section 13 should provide for regulations, I would ask the Minister to reconsider section 13 and get rid of the regulations there and provide for an order.
Now that the Senator has highlighted the point, I take his point with regard to this being regulation; it should be regulation. I shall bring back an amendment on Report Stage to change section 50 so as to provide for regulation rather than order.
I hope the Minister takes my other point.
One out of two is not bad.
Question put and agreed to.
SECTION 51.
Question proposed: "That section 51 stand part of the Bill."
Could the Minister give us an idea of which contract is likely to be required to be in writing? The law with regard to the necessity for being in writing at the moment is very confused and has been confused for hundreds of years. One would have hoped that in this sophisticated age of literacy, we would have been able to move away from these written requirements in so many of our contracts but the Minister is proposing to make confusion more confused by taking power to add further categories of contracts to those that have to be in writing.
The section enables the Minister by order to provide, in relation to goods or services of a class specified in the order, that a contract for the sale of any such goods or supply of any such services shall be in writing. Any contract in any such classes not in writing shall be insupportable. The effect of this section will be to extend section 4 to the sale of goods in so far as a written note or memorandum, signed by the buyer, will become a prerequisite for the enforcement of a contract of the type covered by an order under this section.
May I ask the Minister whether an order made under this section will have the effect of amending the statutory clause?
No, it will not.
In relation to that question, the area is confused, but it has also been in existence a long time and is a very important area because very many contracts are made by word of mouth only. Indeed, apart from writing, there are other forms of permanency that could be induced into contracts—for example, the spoken word on a dictaphone belt. This provides for a written contract. Is there any provision that we could include in this to provide that people be given ample notice of it? After all, the Minister could, by order, introduce stipulations in relation to the sale of cars—the sale of cars again being a bad example because of the certificate—but the sale of anything, for instance, a type of machinery or television set, that all contracts should be in writing? Consumers will be denied all sorts of rights if, in fact, they do not ensure that their contract is in writing. It is a major step and particular effort would have to be made to advertise the change very widely. Maybe it is not appropriate to do it in this section but a word of caution should be offered in relation to a section which gives the Minister such power as this one.
This is merely an enabling power. We have no specific——
The Minister is taking unto himself enormous power.
Is the Minister aware that for hundreds of years the courts have been straining the existing statutory provisions requiring writing so as to avoid it and have equity between parties?
What we have here is a section designed to cater for the area of mass produced goods of a homogeneous nature, for example television sets, motor cycles, where the possibility of the consumer being misled as to his rights at the time of the sale is what counts. It is envisaged that the provisions of this section will be used to suppress the use of prejudicial clauses, exclusion clauses which, while they no longer have legal effect, may be used by unscrupulous sellers. The fact that exclusion clauses are now being prohibited where a buyer deals as a consumer under section 22 of the Bill will not, of its nature, prevent such sellers from verbally misleading the consumer as regards his rights at the time of sale by reference to exclusion clauses and some provision is, therefore, necessary to tackle sellers who persist in forms of misinformation.
What the Minister is saying there is that he proposes not merely to prescribe that it be in writing, but describe the form of contract.
Not just that.
Not the form of contract.
But if it is not in writing? Take the example that the Minister has mentioned, televisions. If the Minister introduces an order, all he has power to do under this section is to provide that such contracts should be in writing; he is not given any particular power under this section to stipulate what should be in the contract.
No.
Right. The Minister then introduces an order, say a week after this Bill has been passed and becomes law, that all contracts henceforth for the sale of television sets shall be in writing. Now, Seán Consumer from Bally-jamesduff goes into his local television dealer and buys a television set. There is no contract in writing. He comes home, switches on the television and it is not working, or six months later it is not working. According to the law, the contract is unenforceable. There cannot be implied terms in an unenforceable contract, so he is left in a position that he has no rights, good, bad or indifferent. He does not even have a contract to sue under.
For that reason, of course, he tries to get a way.
It is only in very exceptional circumstances.
Taking the example that the Minister mentioned, television sets, I do not really know what is at the back of the Minister's mind but I imagine that the Minister can do only one thing under this section and that is to provide that a contract for the purchase or sale of television sets shall be in writing. If it is not in writing, the contract is unenforceable and the consumer has no right whatsoever, not even implied rights, under this Bill.
Just as a consumer would not have the right, neither would the retailer. It would be the retailer who would be trying to extract money.
Money is not the only difficulty involved in this. The only circumstances in which one almost always has written contracts are where a contract is contingent, or where payments are by instalment, or something like that. Most people go into a shop, purchase the goods and get the goods and pay their money. That is it. There is no reason for a written contract between the parties. The parties are not thinking in terms of a written contract. They may be thinking in terms of guarantees, but not in terms of written contracts. If the Minister introduces an order providing for a written contract in relation to the sale of television sets and a written contract is not produced, the trouble is that the last thing on a consumer's mind will be a written contract. He gets no contract. If anything goes wrong from his point of view afterwards, he would seem to have no rights at all.
To be quite honest with the Senator and with the House, at this stage, I am not one hundred per cent satisifed in my own mind about the point. My advisers recommend one thing. I am not clear on it and I want to be clear on it because I do not want to mislead the House. I will come back to the House and clarify it.
Question put and agreed to.
SECTION 52.
An Leas-Chathaoirleach
The four amendments to this section were discussed with amendment No. 6.
Government amendment No. 24:
In subsection (1), page 22, to delete lines 17 and 18 and substitute the following:
"(1) The Director of Consumer Affairs shall have the following additional functions—".
Amendment agreed to.
Government amendment No. 25:
In subsection (1), page 22, line 21, to delete "or under".
Amendment agreed to.
Government amendment No. 26:
In subsection (1), page 22, line 28, to delete "or under".
Amendment agreed to.
Government amendment No. 27:
In subsection (1), page 22, to delete lines 30 to 32.
Amendment agreed to.
Section 52, as amended, agreed to.
Section 53 agreed to.
SECTION 54.
Question proposed: "That section 54 stand part of the Bill".
May I ask the reason for the section?
This is a section which concerns consumer information. It is necessary, in the opinion of the Attorney General, that power to prosecute on indictment be, as a general rule, appropriate to the Director of Public Prosecutions. The section confirms that the prosecuting power conferred on the Director of Consumer Affairs under section 9 (6) (h) and on the Minister, or county council or corporation, by section 18 of the 1978 Act shall be construed as referring to summary proceedings only.
Question put and agreed to.
Schedule agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Wednesday 7 May 1980.