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Clause 107—(Construction Of Deeds And Other Instruments And Presumption Of Survivorship)

Volume 155: debated on Wednesday 14 June 1922

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(2) The Lord Chancellor may from time to time prescribe and publish forms of contracts and conditions of sale of land, and the forms so prescribed and for the time being in force shall, subject to any stipulation, modification, or intention expressed to the contrary, apply to contracts by correspondence, and may, but only by express reference thereto, be made to apply to any other cases for which the forms are made available; and may also prescribe and publish forms to which a testator may refer in his will, but unless so referred to, such forms shall not be deemed to be incorporated in a will.

I beg to move, in Subsection (2), after the word "land" ["conditions of sale of land"], to insert the words

"to which reference may be made in any such contract or conditions."
That relates to the interpretation of an open contract, and it may be of some interest if I refer the House to the first copy of the Bill which was issued, and which had a preparatory Memorandum. On page ix of the original Memorandum an explanation was given of this Clause, and its amendment. It was Clause 105 in the old Bill, and it is Clause 107 in the Bill as it left the Committee. It states that Sub-section (2)
"has been added in order to save the costs of printing, etc., which are incurred when contracts and conditions of sale are prepared. The new Sub-section will also enable the case of contracts by correspondence, which under the existing law are in a very unsatisfactory condition, to be dealt with to the satisfaction of both vendor and purchaser."
I am altogether in favour of anything that will make contracts easier, which will lighten the cost of printing in relation to contracts, and lessen the work which is needed in carrying the contract through. I think, however, that Clause 107, as it now stands, will give rise to a good deal of difficulty. It certainly will put into the hands of the Lord Chancellor for the time being power greater than one ought to possess.

Hon. Members will know that an open contract is entered into every day of the week. It is a very customary thing. One man writes from his house to another man, and says: "I offer you £500 for your house." The man to whom he writes replies: "I accept your offer." That is an open contract. If that contract is entered into under the present conditions the law imports into it all sorts of conditions, and very important conditions. The conditions which are now imported into an open contract have been sanctioned by a great deal of usage, and they are pretty well known. The proposal contained in this Clause is, that wherever there is an open contract by correspondence you shall import into that contract, not the rules and conditions which have grown up and have been sanctioned by the law—some sanctioned by Statute Law and some by Case Law—lout the Lord Chancellor for the time being shall have the power to draw up a list of the conditions that shall be imported into the open contract by correspondence. That gives to the Lord Chancellor too great power altogether. Not merely would he have the power to draw up a list of conditions to be imported into an open contract, but- he would have the power to change it from time to time. In dealing with ordinary business affairs, we should never quite know from time to time what rules and regulations the Lord Chancellor for the time being had established.

The latter part of this Sub-section gives very considerable power to a testator making his will. In making a will, he may refer to some form which the Lord Chancellor has drawn up, and say, "I will adopt that in my will." That is a very convenient proposal, and is one that will be very generally adopted. There will be no objection whatever to the Lord Chancellor drawing up a certain number of Regulations which can be imported by reference into these contracts. Therefore, when I write, accepting an offer that someone else has made to me, I can say, "I adopt the general Regulations of the Lord Chancellor." If it is made permissive, it is a -convenient thing, a cheap thing, and a proper thing; but if it is imported into every open contract, whether we like it or not, it will be a mischief rather than otherwise. It will lead to a very great deal of difficulty, and it will give the Lord Chancellor a greater power in this matter than any Lord Chancellor has previously possessed.

One does not refer to any occupant of the Lord Chancellor's office. This Act may last for very many years, and may apply to any Lord Chancellor. We have had some Lord Chancellors who were very wise men and others who were very foolish men. Some have been distinguished lawyers and others have been rogues. It is well known, of course, that when one Lord Chancellor died and the information was brought to the then monarch, King George III, informing him that the Keeper of his Conscience had died, the remark made by the King was this: "He has not left a greater knave behind him in my dominions." There have been loose men as Lord Chancellors, and there have been those distinguished because of their absence of any knowledge of law. Was there not one Lord Chancellor of whom it was said that if he knew a little law he would have known something of everything? Why should you leave, in the hands of one official, who is sometimes appointed for political purposes, so great a power as this, that may affect hundreds of contracts made from day to day and week to week?

If the House will take into consideration a further argument, it is this. Supposing the Lord Chancellor should devise a list of conditions to be imported into an open contract, and we have any objection to it. Suppose objection was taken, generally, throughout the legal profession. Suppose objection was taken by a number of important societies, what redress or remedy would they have? How could they put this thing right? If these things were done by Act of Parliament, obviously, they could come here and the matter could be dealt with here; but if they are simply declared from time to time by the Lord Chancellor there is no power of redress or remedy whatever.

It may be that the Solicitor-General will be able to meet this Amendment in some way. I only want to ensure that we shall not have to rest upon a, simple decision of one man making the law of this country. It ought to be decided in this House as conditions have been decided in earlier years. The matter was raised in Committee, and I think the Solicitor-General then said that, probably, the work would not be done by the Lord Chancellor at all, but settled by some eminent conveyancing counsel in chambers. That gives added point to any criticism we have to make, because we might be able to criticise the Lord Chancellor, but we do not know whom to criticise when the thing is actually drawn up by someone behind the Lord Chancellor. I should like the House to know that this is not simply a party Amendment, or one brought forward simply to achieve some small alteration in the Bill. It is an Amendment which deals with what is happening in this country every day of the week. The law of open contract is a very important law, and I ask, therefore, that we should have some control in this House or some control outside that given to the Lord Chancellor over the conditions that determine the meaning of an open contract.

I beg to second the Amendment. I will not follow my Ion. Friend in his historical retrospect, but I do hope the Solicitor-General will be able to do something to meet this really important point. This House is jealous of its power in regard to legislation, and we do not want to delegate it. If there had been in this Bill a form of contract as there are other forms of contract, we should have known what we were about.

If any of the terrible disasters that the Mover and Seconder imagine are going to follow the application of this Clause were likely to follow, I should probably accept the Amendment, but, in my view, none of them will happen. Let us understand what the Clause is about. Parties who buy, sell, or lease land very often do it in a very casual way, by correspondence, and sometimes even by word of mouth. They do not put into their bargains the various conditions and stipulations which are necessary in order that they should really know what bargain it is that they are making. Not having done so, one thinks that something was meant which was not expressed, and the other thinks differently, and so they get to loggerheads. That is how a great proportion, a great majority, of disputes arise about dealings in land. I am sure that solicitors in the House will bear me out when I say that that is the most fruitful cause of the trouble which leads to expenditure upon those undeserving persons, the lawyers.

In order to try and remedy that state of things, this Clause has been drafted. Business men in the House will know that most business men in the various markets in the country make their contracts on recognised standard forms, issued by the association of which they are members—corn, wool, or whatever the trade may be. There are different forms; but when they make a bargain they know the details of the bargain, and all the various conditions, and so on, because they do it by reference to the standard form of their trade. That is the principle underlying this Clause. Somebody has to draw up the form. The Lord Chancellor is merely put in, so to speak, as the association who has to give the usual form to be incorporated in the contract which has been made, say, by correspondence. The Clause provides that the forms so drawn up apply to sales that in everyday life are ordinarily meant. These forms shall from time to time be drawn by the Lord Chancellor. If the form, after being published, is found from any point of view not to be quite as good a form as it might be, it can be withdrawn and an amended one can be published in its place. The Lord Chancellor is put in simply because we must have some Department responsible, somebody who can be hauled over the coals for not publishing the right form

What will in effect be done—and I say this deliberately so that the House can have a record—will be that the Lord Chancellor will not draw all these forms himself. He will employ a competent draughtsman to draw them for him, and those forms, when provided by conveyancing counsel, or whoever it is that is employed to do the work, will, of course, be submitted to the persons primarily concerned in the adjusting of contracts. Forms will be submitted in due course before publication to the Law Society for their consideration. The forms are the usual forms, adapted for the purpose, just as the Law Societies to-day have drawn conditions of sale which are incorporated by reference in contracts made by correspondence. That is the whole object of this Clause. It is to enable parties making open contracts by correspondence to make a contract which is clear in its terms. The Lord Chancellor is not going to make the laws by himself in drafting these forms, for the Clause provides that these forms shall not be employed in a contract except in so far as the provisions in the correspondence differ from the forms. If there is anything in the correspondence which is not consistent with the incorporated form, then the written word, according to the ordinary principles of the law, will prevail over the printed word, and the printed word will be modified so far. My submission to the House is that this is not only a good but almost a necessary provision in order to get over what to-day is a fruitful source of unnecessary litigation.

One can agree with practically every word the Solicitor-General has said in respect to this Amendment, but I think the hon. and learned Gentleman has overlooked what is the real effect of the Amendment itself. The real effect, read in conjunction with the next Amendment standing in the same names is this, that by the Clause as it stands it is sought to make these common forms that are to be prepared applicable in all cases whether there is any reference to them or not in the correspondence, whereas the effect of the Amendment is that they are only to be deemed to be included and part of the contract if they are referred to in the correspondence, which is exactly opposite to the Clause as it stands. The difficulty at the present moment is this: a contract is made for the sale of a house for a certain sum of money it is made by a certain exchange of letters. One man says to another, "I will give you £1,000 for your house, No, so and so, in a certain street." The seller accepts the amount. I should like to know from the Solicitor-General whether it is intended in these forms to alter or vary the Statute of Frauds. For instance, in the correspondence there may be no reference to the date for completion of the purchase—a very important matter. I do not know whether the forms that the Lord Chancellor or some other learned gentleman is going to prepare are going to say that a contract that is arranged by correspondence that has not the date of completion is going to be deemed completed at the end of three months or six months. This would be a complete alteration of the Statute of Frauds as we know it to-day—a Statute distinctly made for the purpose of preventing humbug or fraud in connection with the sale of property.

At the present moment there are in existence in this country, I should think, at least a dozen different complete sets of printed forms similar, I suppose, to the one suggested. There is one prepared by the Liverpool Law Society, another which operates in London. There is a different one for Birmingham, and I think various other towns have got different sets of printed conditions. I presume the real meaning of this Clause is this: that when a man sells property to another without saying anything about the different conditions which are part of the sale, that some of the Clauses which the Lord Chancellor or some other person has drawn up are to be considered as incorporated in the form as part of the contract and are to be carried out. Perhaps the Purchaser has never heard of them, and the vendor does not intend to impose them. According to the Amendment before the House, in order to bring this new printed form of contract into existence, there would have to be a word or two in the correspondence to say that the Lord Chancellor's form is to be applicable, whereas the Clause as it stands says that the Lord Chancellor's form is to be applicable unless it is expressly excluded.

For my part, I have always been in favour of the simplest possible form of contract between two people dealing in property. I have had, I am sorry to say, over 50 years' practical experience of contracts with property. It has been my business all my life to act both for vendors and for purchasers, and, therefore, I know something about the subject. I think that neither the Law Society conditions in Liverpool, nor those in London, nor Birmingham, nor the Lord Chancellors' ought to be imported into any contract whatever unless the parties desire it to be so. For that reason I am in favour of the Amendment. Is it intended to save space, time, or trouble, by adopting this printed contract as a whole? It reminds me of the story of the American who had a printed prayer hung up over his bed-head, and when he went to bed simply looked at it and said, "Them's my sentiments," so, as he supposed, saving a good deal of time. It would appear to be the same here. I do not think it is right in any contract for the sale of property in the future to incorporate into that sale 20 or 30 printed rules of which neither vendor nor purchaser has ever heard, and do not intend to be made applicable to the transaction. The Amendment is a good one. This Clause Only ought to be deemed to be incorporated if in the correspondence that has taken place either party says, "Subject to the Lord Chancellor's," or any other Clause, in whatever way it may be described. The simpler a contract the better; therefore I am in favour of the Amendment.

It is with some trepidation that I follow my hon. Friend who has just spoken, because I have only had about half the number of years' experience that he claims. I should like to support this Clause as it is drawn. The various conditions which have been drawn up and prepared by various law societies all over the country are rather dangerous documents. What particular document we are going to have I cannot say, but this Clause as drawn, and as it stands now, I am inclined to think, will leave open the possibility of using such a form as I think would be very useful. It need only be a very short form setting forth that where A agrees to buy and B agrees to sell so-and-so for so much, that then a number of other questions will be settled for the parties. Other conditions can be adopted by those who wish to carry out special provisions which may be embodied in the contract. In a simple case where someone says, "I will buy so-and-so for so much," and the other party says, "I will sell so-and-so for so much," surely certain other stipulations which are perfectly reasonable can very reasonably be embodied in a form which would be of great assistance to the ordinary individual doing business of this kind.

I hope the Solicitor-General will not accept this Amendment. I think hon. Members will agree with me when I say that one of the greatest curses that can come upon us is the adoption of any words affording a loophole for a misunderstanding in a contract. If you have a contract which may contain the provisions or exclusions embodied in this Amendment, then you do provide a loophole for a misunderstanding. If this Amendment is pressed to a Division I shall vote against it.

If the Solicitor-General will assure me that there is to be no alteration in the Statute of Frauds, it is possible that we might agree.

I do not think any business men entering into an arrangement with other business men would like to think that something is incorporated into an open contract of which they have no knowledge. Business men to whom reference has been made carrying out trade transactions in a large city may incorporate the conditions of the association to which they belong. That is quite a different thing because it saves them money and trouble, but what objection is taken to is two parties having thrust upon their contracts something about which they know nothing and did not intend. I know that the Solicitor-General made a reference to a responsible body who would decide upon these forms, and in that case I should have more confidence in the list drawn up. Nevertheless this is a considerable power to be given in such a case as that of a letter written by a man offering £500 for a house and the answer comes back, "I will give you £500 for the house." What is imported into that contract, and who is going to decide the conditions? Does the Lord Chancellor decide the length of the title? Supposing upon the publication of the list and the conditions which it is sought to incorporate into an open contract, the parties object to certain conditions, what remedy have they got?

I exclude those conditions, and I say when I make my bargain that I sell you this property on such and such terms excluding those conditions.

I am speaking of what may happen between two ordinary purchasers and sellers who have no knowledge of the Lord Chancellor's list. I will take the usual form. If a working man is selling his house, a letter may pass between the parties. It may be a simple document stating, "I intend to sell this house to you at a certain price." I am sure it will come as a surprise to them to know that the Lord Chancellor's conditions have been incorporated into such a contract. Supposing the parties consider that the conditions are wrong and should be amended or amplified. After all the Lord Chancellor has no particular knowledge of such conditions. If we complain of the list and the conditions, what remedy have we got? How can we amplify such contracts? How can we have the list altered if we think it is not bearing fairly and properly upon the transactions which have arisen? I hope we shall have some assurance on this point, and then perhaps it will not be necessary to take a division upon this Amendment. It has been suggested that there will be a consultation with the Law Society. I shall be quite satisfied if the consultation takes place with those who have daily knowledge of these transactions.

I did not say that the Law Society would be consulted on the contents of the forms. I meant that those members would be consulted who were best qualified to consider the drafting of such forms. The point of difference between the Clause and the Amendment is that under the Clause, as it is drafted, ignorant laymen may think they are making a good contract when they are not doing anything of the kind, and under the Clause they will be protected against the danger into which they may unwittingly fall. If they do not know of the existence of the Lord Chancellor s form, if they make a bad contract they will be protected. If we have the contract made in the form contained in the Clause, then the proper form will be automatically incorporated in the contract.

After the explanation which has been given by the Solicitor-General, I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.