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Commons Chamber

Volume 931: debated on Friday 6 May 1977

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House Of Commons

Friday 6th May 1977

The House met at Eleven o'clock


[Mr. SPEAKER in the Chair]

Orders Of The Day

Presumption Of Death (Scotland) Bill

As amended (in the Standing Committee), considered.

Clause 1

Action Of Declarator

11.4 a.m.

I beg to move Amendment No. 1, in page2, line 15, leave out

"(including the Lord Advocate for the public interest)"

The amendments will ensure that reference to

"any person having an interest"
includes the Lord Advocate specifically. Although reference to the Lord Advocate was already included in Clauses 1 and 4, it is thought that it should be made clear that he is to be considered as taking an appropriate interest wherever the phrase occurs, notably in Clause 4(3). Rather than that there should be parenthetical references throughout the Bill, it is thought preferable to have one reference in the interpretation clause. The amendments make no alteration to the substance of the Bill.

I commend these amendments to the House. They are drafting improvements and the net result is a clearer and better drafted Bill.

Amendment agreed to.

Clause 4

Recall Or Variation Of Decree

Amendment made: No. 2, in page 4, line 2, leave out

"(including the Lord Advocate for the public interest)".—[Mr. Carmichael.]

Clause 17


Amendment made: No. 3, in page 9, line 36, at end insert

"'any person having an interest' includes the Lord Advocate for the public interest;—".[Mr.Carmichael.]

Clause 20

Short Title And Extent

I beg to move Amendment No. 4, in page 10, line 22, at end insert—

'(2) This Act, except this section, shall come into force on such date as the Lord Advocate may by order made by statutory instrument appoint'.
The effect of this amendment is to give a time after Royal Assent for the making of the appropriate rules of procedure under Clause 15(2). It provides for the making of rules of procedure to deal with such matters as persons on whom service of the summons or initial writ in an action of a declarator is to be made, and the manner and extent of advertising of the action. It is advisable to allow for the regulations to be made before the Bill comes into effect.

It is obviously desirable that this provision should be included. It enables the regulations and the Bill to come into force at the same time. I pay tribute to Mr. Hamish Henderson of Edinburgh University, who raised this point.

Amendment agreed to.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 ( Third Reading), and agreed to.

Bill accordingly read the Third time and passed

Unfair Contract Terms Bill


As amended ( in the Standing Committee), considered.

New Clause 1

Obligations Under Consumer Protection Acts

'(1) In section 3 of the Consumer Protection Act 1961 (provisions against marketing goods which do not comply with safety requirements), after subsection (I) there is inserted—

"(1A) Any term of an agreement which purports to exclude or restrict, or has the effect of excluding or restricting, any obligation imposed by or by virtue of that section, or any liability for breach of such an obligation, shall be void.".

(2) The same amendment is made in section 3 of the Consumer Protection Act (Northern Ireland) 1965.'—[ Mr. Ward.]

Brought up, and read the First time.

11.10 a.m.

I beg to move, That the clause be read a Second time.

I pay tribute to the hon. Member for Shoreham (Mr. Luce), who, unfortunately, cannot be with us today, because in Committee he raised a doubt affecting the view of a number of people of statutory liability in the area of the Consumer Protection Act 1961 which the Consumers Association and other bodies represented to certain hon. Members ought to be included in the Bill. We accepted that there was some doubt, but in Committee we resisted an amendment. I can now say that I accept in principle that we should try to remove that doubt.

The new clause achieves this very precisely, and in a far better way than that proposed by the hon. Member for Shoreham. The new clause also correspondingly amends—sand this is important—the Consumer Protection Act (Northern Ireland) 1965, and I ask the House to accept the new clause as well as Amendment No. 1, which is purely consequential upon it. It amends Section 3 of the Consumer Protection Act 1961. I think that the House will agree that dealing with the whole Act is a better way to tackle that doubt than that proposed earlier.

Question put and agreed to

Clause read a Second time, and added to the Bill.

Clause 1

Scope Of Part I

Amendment made: No. 1, in page 2, leave out lines 1 and 2.—2;[ Mr. Ward.]

Schedule 1(2) provides among other things that charterparties between persons acting in the course of a business are exempt from Clauses 2—except subsection (1)—to 4. But Clause 7 should also be prevented from applying to charterparties, because that deals with the hire of ships, which is a similar situation to that when both parties act in the course of a business. That is now achieved by the amendment.

Clause 20 deals with an area in which the Lord Advocate is much more specialist than I but makes clear that in Scots law Clause 20 does not affect commercial charterparties of ships or hover-craft, that is, those entered into between parties both of whom act in the course of a business in exactly the same way. In addition, commercial charterparties are already excluded from the scope of the controls over liability for breach of duty or negligence and the controls relating to contractual obligations and indemnities.

One of my Amendments deletes from Clause 20 the exclusion of contracts subject to a statute or rule of law affecting the right of a person to exclude or restrict his liability. This exclusion is no longer necessary because the Committee included Clause 27 in Part III of the Bill.

Amendment No. 41 is merely a deletion of some unnecessary words, because Clause 2 now applies, by virtue of Clause 1(3), only against a person dealing in the course of a business. Amendment No. 42 is consequential on No. 2.

Amendment agreed to.

I beg to move Amendment No. 3, in page 2, line 8, leave out 'this Part of this Act applies and

In some ways I should apologise to the House since I moved in Committee the inclusion of words which I am now asking should be taken out. This is merely a drafting amendment to pinpoint more precisely the relevant provisions to which Clause 1(3) applies. It makes it clear beyond doubt that the amendments to the Misrepresentation Acts are not confined to cases where liability for misrepresentation arises in the course of a business.

Amendment agreed to.

Clause 2

Negligence Liability

I beg to move Amendment No. 4, in page 2, line 23, at end insert

or to a notice given to persons generally or to particular persons'.

I remind the House that Clause 2(3) was amended in Committee so that controls on notices parallel to those on contract terms allowed a non-contractual notice to be used reasonably to exclude or limit liability for negligence not involving death or personal injury. While I and my right hon. Friends still believe that the best course would have been to make ineffective all notices given unilaterally, we accept that nothing vital is lost in the change and that the new approach is easier to understand. We also accept that it gives the protection that many of the professions, and others who have made representations to hon. Members on both sides, think that they need in relation to gratuitous services, such as advice, that they may give to individuals, references and valuations. There is, therefore, no intention of seeking to change the original provision. If, however, the Bill is to control notices, whether contractual or not, in the same way that it controls contractual terms, there seems little point in having a separate provision for notices. The amendments to subsections (1) and (2) achieve the same purpose as the amendment accepted in Committee, but do so by integrating the controls on notices with those on contract terms. I am sure that this will commend itself to hon. Members opposite who were successful in persuading the Committee on this point. The other amendments to Clause 2 and those to Clauses 3 and 10 are purely consequential.

Amendment agreed to.

Amendments made: No. 5, in page 2, line 28, after 'term', insert or notice'.

No. 6, in page 2, line 29, leave out subsection (3).

No. 7, in page 2, line 37, after 'term', insert 'or notice'.

No. 8, in page 2, line 38, leave out 'a term or notice'.—[ Mr. Ward.]

Clause 5

"Guarantee" Of Consumer Goods

Amendment made: No. 9, in page 3, line 34 after 'term', insert 'or notice'.—[ Mr. Ward.]

I beg to move Amendment No. 10, in page 4, line 5 leave out

"where the guarantee was contained in the contract itself".

With this we may take Amendment No. 28, in Clause 18, page 9, line 18, leave out from "not" to end of line 20 and insert

"a guarantee given by one party to the other party to a contract under or in pursuance of which the ownership or possession of the goods to which the guarantee relates is transferred".

11.15 a.m.

The amendments are not intended to prevent the exception to Clause 5, which was introduced because in that situation the consumer is already protected by the Sale of Goods Act and by the Supply of Goods (Implied Terms) Act, which are now reinstated in Clause 6, from applying to the case where the guarantee formed no part of the contract under which the goods passed. Amendment No. 28 corresponds to the amendment to Clause 5 assuming that No. 10 is accepted.

It will be recalled that Clause 5 for England and Wales prevents exclusion or restriction of liability by means of contract terms contained in guarantees of consumer goods supplied for domestic use. Clause 18 therefore makes the corresponding provision for Scotland. In this connection both clauses exclude from that control the case where goods are supplied under a contract of sale or other supply of the goods where adequate control is provided for by other provisions of the Bill. But they do so in effect only where the guarantee forms part of the contract itself.

The Law Commissions did not recommend that this exclusion from the guarantee control should be so limited. Just as Amendment No. 10 ensures that the exclusion is not so limited for England and Wales, so the present amendment ensures the same for Scotland. I am sure that my right hon. and learned Friend the Lord Advocate will be pleased to answer any points of legal detail that hon. Members wish to address to him. I believe that this is straightforward and I therefore ask the House to approve the amendment.

Amendment agreed to

Clause 7

Miscellaneous Contracts Under Which Goods Pass

I beg to move Amendment No. 11, in page 5, line 12, at end insert

'or the Trading Stamps Act (Northern Ireland) 1965'

With this we may take the following amendments: No. 13, in Clause 8, page 5, line 29, at end insert—

'(2) The same section is substituted for section 3 of the Misrepresentation Act (Northern Ireland) 1967'.
No. 14, in Clause 10, page 5, line 41, leave out 'and

No. 15, in Clause 10, page 5, line 42, after 1967', insert
'and section 3 of the Misrepresentation Act (Northern Ireland) 1967'.

This group of amendments is consequential on the extension of the Bill to Northern Ireland. Amendment No. 11 ensures that, just as Clause 7 does not apply to cases where goods pass on a redemption of trading stamps in England and Wales, it does not apply in a similar situation in Northern Ireland.

Amendment No. 13 makes the necessary corresponding provision for the Misrepresentation Act (Northern Ireland) 1967 and Amendments Nos. 14 and 15 deal with that Act as is necessary following the extension of the Bill to Northern Ireland.

Amendment agreed to

Clause 8


I beg to move Amendment No. 12, in page 5, line 28, leave out from 'term' to the end of line 29 and insert

'satisfies that requirement to show that it does'

With this, we may discuss Amendment No. 35, in Clause 22, page 11, line 24, leave out 'not'.

We now come to the rather more complicated area of burden of proof for the reasonableness test, and I move this amendment to bring the section in the Misrepresentation Act 1967 into line with that set out in Clause 10(3).

Hon. Members will know that this difficult question of the burden of proof for the reasonableness test was discussed at great length in Committee and that, as originally contained in the Bill, Clause 10 was reversed so that now the onus is on the person relying on an exemption clause to show that it is reasonable. Later today the House will be asked to consider an amendment to Clause 22(3) so that the burden of proof is similarly reversed for Scotland.

Again, if there are special questions on the operation of this proposal in Scotland, I hope that hon. Members will pose them to my right hon. and learned Friend the Lord Advocate.

I hope that these amendments will be accepted, because this is a tidying-up proposal to ensure that the Bill is consistent throughout at this stage. I understand from my hon. Friend the Minister of State, Department of Prices and Consumer Protection that there are still certain reservations in various people's minds, and I understand that he will deal with those in more detail.

As we are taking Amendment No. 35 with Amendment No. 12, I ought to point out that the amendment, while necessary for the sake of consistency between Parts I and II of the Bill—the part for England and Wales and Scotland respectively—does not necessarily represent the final form of this clause.

The burden of proof as between contending parties has to be considered not only in terms of this Bill but in relation to other legislation. Regard has to be paid to such matters as the effect which a duty of the kind imposed by the amendment may have on the normal processes of trade and business, the possible increase in litigation which may be entailed, and the balance which needs to be maintained between the interests of consumers and a reasonable degree of freedom to enter into contracts.

These are complex issues which cannot be resolved finally without a great deal of consideration. That is why, as my hon. Friend said, we are carrying out further consultations before reaching any final views. However, this is a matter which can be left to the later stages of the Bill. Meantime, it is desirable that there should not be any inconsistency on this point between Parts I and II.

With that strong reservation, I ask hon. Members to support the amendment at this stage.

Amendment agreed to

Amendment made: No. 13 in page 5, line 29, at end insert—

'(2) The same section is substituted for section 3 of the Misrepresentation Act (Northern Ireland) 1967'.—[Mr. Ward.]

Clause 10

The "Reasonableness" Test

Amendments made No. 14, in page 5, line 41, leave out 'and'

No. 15, in line 42, after 1967', insert and section 3 of the Misrepresentation Act (Northern Ireland) 1967'.

No. 16, in page 6, line 11, at end insert—

'(2A) In relation to a notice (not being a notice having contractual effect), the requirement of reasonableness under this Act is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances obtaining when the liability arose or (but for the notice) would have arisen.'.

No. 17, in line 12, leave out 'does satisfy' and insert 'or notice satisfies'.—[ Mr. Ward]

Clause 12

Interpretation Of Part I

I beg to move Amendment No. 18, in page 7, line 1, leave out 'but'.

With this we may consider Amendment No. 19, in line 2, leave out 'not'.

This amendment seeks to change the special immunity on arbitration clauses in the Bill. I suggest that we should not give them this special immunity.

Arbitration clauses are a mixed blessing to consumers. Sometimes they can be a benefit and sometimes not. The Bill assumes generally that they are always good. That is what I question.

I cite the case of a certain holiday brochure, that issued by Ingham. The booking conditions which the firm uses contain these words:
"Clause 8. Arbitration Scheme. In the unlikely event that you have cause for complaint and we are unable to agree on suitable settlement, the dispute will be referred to an independent Arbitrator who will be appointed by the Institute of Arbitrators. The Arbitration scheme devised by the Institute of Arbitrators after consultation with the Travel Industry, includes a simple and inexpensive method of arbitration. The arbitration will be conducted in accordance with English law. There is a deposit payable of £10 for the first claimant and £5 for each additional claimant and if you choose this inexpensive method your liability for costs whatever the outcome of your case will not exceed the deposit paid."
That sounds all very nice. Quite a few other tour operators use similar clauses. But it may not be quite such an attractive proposition as it seems.

The arbitration scheme which ABTA—the travel industry's trade association—has set up with the Institute of Arbitrators can cost the consumer with a genuine complaint quite a lot of money. Under the recently announced amendments to the scheme, it could cost the sum of £12 for a family of three to institute an arbitration under the scheme. This would set in train an arbitration procedure on documents; that is to say, there would not be a personal hearing where the pros and cons of the complaint could be examined.

I have had some recent experience on behalf of a pensioner in my constituency in getting a complaint resolved by letters, and I can tell the House that it is a long and tedious job. The argument in the case was whether there was central heating in the hotel and, if so, whether it was switched on, and there was also some altercation about whether a "sea view" meant the same to both the tour operator and my constituent.

Before the hon. Gentleman continues, will he make it clear that this present system of arbitration was part of an agreement made by the tour operators with the Director of Fair Trading, Mr. John Methven, and was specifically to meet the needs which he felt at that time were lacking, and that it is part of a voluntary code of practice with the travel industry?

I am grateful for that intervention, and I take it into account. As I have said, there are good and bad arbitration schemes. The assumption in the Bill which I question is that which implies that, on the whole, they are always good.

The House will appreciate that to the average holidaymaker an arbitration scheme established by agreement between the trade organisation—in this case, ABTA—and the Institute of Arbitrators is not likely to generate a great deal of confidence in its ability to see the problem from the consumers' point of view. I do not question the impartiality and competence of arbitrators but, on the other hand, I can well understand that a family who have just had a precious summer holiday ruined, in their view, and their complaint turned down by the arbitrator might well feel a sense of grievance and suspect that the arbitrator was more "one of them" than one of us".

If arbitration were the cheapest and most effective way of getting a dispute heard and disposed of, for all its shortcomings as I have described, I would be in favour of it. But that is not the case. There is a much better alternative open to consumers who seek redress which does not suffer from the disadvantages I have described, and it provides a better service for less expenditure in many cases.

I refer to the small claims procedure in the county court. This is at least as well qualified to deal with consumer complaints about holidays, or anything else for that matter, and charges only 10 per cent. of the amount being claimed as the court fee to set the procedure in motion. Perhaps the greatest advantage the county court has over the private arbitration is the fact that it is local. There are about 300 county courts in England and Wales, so there is not far to go for most people when they wish to make a claim. The ABTA arbitration scheme, on the other hand, is likely to involve most people in a considerable journey to have their claim dealt with, unless of course it is all dealt with by correspondence.

Again, will not the hon. Gentleman agree that it is open to the holidaymaker who believes that he has a grievance to choose the alternative? He is not confined to the travel industry's agreed form of arbitration if he does not choose to be.

I accept that. But it is my claim that arbitration is being treated differently. Special immunity is being given in the Bill to arbitration clauses, and it is that which I seek to challenge.

I am not attacking the ABTA arbitration scheme or a similar scheme run by the Motor Agents Association. I am not attacking the arbitration clauses as such. If they are reasonable and fair—and there are tests of this in the Bill—they may well be a good means of resolving problems that people have. This amendment provides that in those cases where an arbitration clause is reasonable, it will be upheld. Provided it passes the test of reasonableness, the arbitration clause will, under this amendment, be upheld and bind the parties to dispose of their dispute by the arbitration machinery. If, on the other hand, the arbitration clause were found by the court not to be fair and reasonable, then it would be held not to operate under the terms of Clause 3.

I do not seek to enable consumers with disputes to go to the county court in any event when they are faced with an arbitration clause. What I do say is that any arbitration clause should only be forced on to a consumer if it is a reasonable one. That is what I believe this amendment seeks to achieve.


The Minister of State, Department of Prices and Consumer Protection
(Mr.John Fraser)

The effect of the amendment would be to impose a test of reasonableness on all arbitration clauses. I think that that would be a disservice to many contracting parties. Business men find it useful to go to arbitration because they sometimes find that it is speedier and cheaper and that they can preserve their privacy and call upon expertise. It would be a very great pity if doubt were thrown on the certainty of arbitration clauses, particularly in business contracts.

If the House accepts the amendment it could create difficulties for consumers. The amendment says that the arbitration clause should be subject to a reasonableness test. If a consumer wanted to challenge the arbitration clause, he would have to go to the county court to do so. If the court came to the conclusion that the clause was reasonable, the consumer would then have to go to arbitration at another venue and that would not do any service to him at all.

I shall go one better than the Godfather—I shall make my hon. Friend two offers that he cannot refuse. There is a difficulty at the moment in that if the consumer considers that the arbitrator has made a mistake or is biased, he has to apply to the High Court for remedy. That is unsatisfactory because of the increasing numbers of consumer disputes going to arbitration, not all of which involve large sums of money.

I am pleased to announce that the Lord Chancellor has undertaken to consider amending the law of arbitration in England and Wales so as to confer on the county court, within the normal financial limits, the jurisdiction now exercised by the High Court. If this proposal is feasible it will, I think, improve the position of consumers considerably.

Secondly, if my hon. Friend will agree to withdraw his amendment, I undertake to consider the possibility of introducing in another place a Government amendment to deal with arbitration clauses in consumer contracts, but not in others.

My inclination at the moment is to-wards making unenforceable an agreement that requires a person dealing as a consumer to submit future differences to arbitration. I ask those trade and professional bodies which are concerned with arbitration involving consumers to let me have their views on this proposition and indeed on consumer arbitration generally as soon as possible. I think that this may be more acceptable to the consumer and more useful. I hope that the announcement I have made and the undertaking that I have given will persuade my hon. Friend to withdraw his amendment.

In relation to my two earlier interventions and the speech I am about to make, I declare an interest in that I was a tour operator for many years. I retain a link with the tour industry as an independent travel consultant.

As the hon. Member for Hemel Hempstead (Mr. Corbett) has cited the ABTA scheme, I want to reinforce the points I made earlier that that scheme was agreed with the Director General of Fair Trading as part of an agreed voluntary code of practice for the tour industry. The scheme gives the aggrieved client the chance to go either to arbitration or to the county court in the normal way, whichever he chooses.

I have no hesitation in supporting the Minister in the spirit of what he is advocating—the need to make matters easier for consumers. That was the prime purpose of the ABTA scheme from its inception. It was intended to make it easier for people who thought that they had a complaint to get around the table with the arbitrator and argue the issues in a relaxed and informal atmosphere, rather than through the county court.

These matters are often relatively minor and are not normally associated with the great process of English law. It was thought that a holidaymaker should have easy access to arbitration if he chose. Although the scheme has been of considerable expense to the travel industry it has not been used a great deal. That is not a criticism of the scheme but a reinforcement of the point that the number of complaints by holidaymakers is infinitesimal compared with those who are satisfied with the service provided. I have no objection to the proposals that the Minister has outlined.

Having heard the wise and sensible words of the Minister of State, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14

Scope Of Part Ii

I beg to move amendment No. 20, in page 7, line 35, leave out paragraph (d).

With this we may take Government Amendments Nos. 21, 22, 24, 25 and 26.

This amendment and the others to be taken with it are essentially drafting amendments in the interests of logic and clarity. Their primary object is to take paragraph (d) out of subsection (1) of Clause 14 and to put it into subsection (2).

Subsection (1) delineates the general scope of Part II of the Bill. Subsection (2) is intended to qualify or restrict that generality in particular areas. As contracts covered by paragraphs (a), (b) and(c) in subsection (1) already include those mentioned in paragraph (d), and (d) is essentially qualifying the generality of subsection (1) in relation to marine contracts, it is proper that they should be listed in subsection (2). In the last two lines of the substituted paragraph the opportunity is taken to underwrite the consumer preference situation of consumer contracts.

The reason for the limited application of Clauses 15 to 17 to these maritime contracts is to safeguard existing arrangements in the commercial maritime field while ensuring that there is adequate protection for the consumer. I hope that the House will approve the amendments.

Amendment agreed to.

Amendments made: No. 21, in page 8, line 6, after 17', insert ( a)'.

No. 22, in page 8, line 8, leave out ( a)' and insert (i)'.—[ The Lord Advocate.]

I beg to move Amendment No. 23, in page 8, line 10, leave out paragraph (b).

Clause 14(2)(b) provides that the provisions of Clauses 15 to 17 would be excluded from contracts by statutory enactments only where the latter expressly regulate the terms of the contract. In this way the objects of Part II, which covers Scotland, are protected against unintentional statutory encroachments. In Part III, which covers the United Kingdom, Clause 27(1) has a different wording but achieves the same result. Therefore, paragraph (b) generally is unnecessary. It is preferable to have the provision relating to statutory interpretation in the United Kingdom application part of the Bill where the same provisions can apply to United Kingdom statutes of Clause 14. I commend the amendment to the House.

Amendment agreed to.

Amendments made No. 24, in page 8, line 15, leave out ( c)' and insert (ii)

No. 25, in page 8, line 17, leave out ( d)' and insert (iii)'

No. 26, in page 8, line 18, at end insert:

(b) apply to—
a contract of marine salvage or towage; a charterparty of a ship or hovercraft; or a contract for the carriage of goods by ship or hovercraft,
only to the extent that—
  • (i)both parties deal or hold themselves out as dealing in the course of a business (and then only in so far as the contract purports to exclude or restrict liability for breach of duty in respect of death or personal injury); or
  • (ii)the contract is a consumer contract (and then only in favour of the consumer)'.—[The Lord Advocate.]
  • Clause 17

    Unreasonable Indemnity Clauses In Consumer Contracts

    I beg to move Amendment No. 27, in page 9, line 12, leave out for breach of duty'.

    This is a drafting amendment. Clause 17(2) defines what is meant by "liability" for the purposes of that clause as being
    "liability for breach of duty".
    However, if hon. Members look at subsection (1) they will see that it refers to liability incurred either as a result of breach of duty or breach of contract. Therefore, the definition of "liability" in subsection (2) should not have been limited to liability for breach of duty.

    The amendment therefore deletes the reference to breach of duty in subsection (2), which will then have the effect of providing that the expression "liability" means liability as outlined in subsection (1). I hope that the amendment will be approved.

    Amendment agreed to

    Clause 18

    Guarantee Of Consumer Goods

    Amendment made: No. 28, in page 9, line 18, leave out from not 'to end of line 20 and insert:

    'a guarantee given by one party to the other party to a contract under or in pursuance of which the ownership or possession of the goods to which the guarantee relates is transferred'.—[Mr. Ward.]

    Clause 19

    Obligations Implied By Law In Sale And Hire Purchase Contracts

    I beg to move Amendment No. 29, in page 9, line 36, leave out excludes or restricts 'and insert:

    'purports to exclude or restrict'.

    With this it will be convenient to take Government Amendments Nos. 30 and 31.

    These are drafting amendments intended to achieve consistency in the wording used in Part II. Clause 15, which deals with liability for breach of duty, and Clause 18, which deals with the guarantee of consumer goods, refer to a term of a contract or guarantee which

    "purports to exclude or restrict liability".
    In contrast, Clauses 19 and 20 simply refer to a term of a contract which "excludes or restricts" liability rather than "purporting" to do so. There is no good reason for this difference. Indeed, it is obvious that the generality of the wider expression is preferable. Accordingly, I hope that the House will accept the amendment.

    Amendment agreed to.

    Amendment made: No. 30, in page 10, line 5, leave out excludes or restricts 'and insert:

    purports to exclude or restrict'.—[The Lord Advocate.]

    Clause 20

    Obligations Implied By Law In Other Contracts For The Supply Of Goods

    Amendments made: No. 31, in page 10, line 20, leave out excluding or restricting 'and insert:

    purports to exclude or restrict'.—[The Lord Advocate.]

    No. 32, in page 10, line 32, leave out from 'Act' to end of line 35 and insert:

    but does not apply to—
  • (a) a contract of sale of goods or a hire-purchase agreement; or
  • (b) a charterparty of a ship or hovercraft unless it is a consumer contract (and then only in favour of the consumer)'.—[Mr. Ward.]
  • Clause 22

    The "Reasonableness" Test

    I beg to move Amendment No. 33, in page 11, line 14, leave out '(a)'.

    This amendment is intended to clarify Clause 22 rather than to change its substance. As it stands, subsection (1) is intended to make two provisions: first, that in applying the "reasonableness" test regard is to be had only to the circumstances which were or should have been known to or in the contemplation of the parties at the time that the contract was made; and, secondly, that in determining matters of fairness or reasonableness relating to Clauses 19 and 20 regard is to be had in particular to the guidelines set out in Schedule 2.

    However, the placing of the word "only" before paragraph (a) suggests that it is intended to govern both paragraphs (a) and (b) and consequently, in relation to paragraph (b), that a court or arbiter—that is the Scottish equivalent of" arbitrator—would be debarred from considering the circumsatnces mentioned in paragraph (a) except in so far as they fall within the Schedule 2 guidelines. That restriction was not intended. The amendment restores the position by making it clear that a court or arbiter should have regard to those circumstances and, in particular, to the guidelines. I hope that the amendments will be approved.

    Amendment agreed to.

    Amendments made: No. 34, in page 11, line 17, leave out from 'made' to shall 'in line 20 and insert—

    (2) In determining for the purposes of section 19 or 20 of this Act whether it was fair or reasonable to incorporate a term in a contract, regard shall be had in particular to the matters specified in Schedule 2 to this Act; but this subsection.'—[The Lord Advocate.]

    No. 35, in page 11, line 24, leave out 'not'.—[ Mr. Ward.]

    Clause 23

    Interpretation Of Part Ii

    I beg to move Amendment No. 36, in page 12, line 40, at end insert—

    "(4) In sections 14 and 15 and 18 to 20 of this Act, any reference to excluding or restricting liability for breach of an obligation or duty shall include a reference to excluding or restricting the obligation or duty itself."
    The purpose of this amendment is to close a potential loophole in the control imposed on the exemption clauses in Clauses 15 and 18 to 20.

    At present these clauses either render void or make subject to the reasonableness test certain terms in a contract which exclude or restrict liability for breach of duty or equivalent obligations in contracts for the supply of goods.

    It is conceivable that parties to a contract may seek to avoid the controls imposed on these exemption clauses by inserting provisions in their contracts which purport to exclude or restrict, not the liability for breach of the relevant duty or obligation, but the relevant duty or obligation.

    In order to close this potential loophole, the amendment proposes that in these clauses and in Clause 14 any reference to excluding or restricting liability for breach of an obligation should include a reference to excluding or restricting the obligation or duty itself.

    This amendment is similar in effect to the corresponding English provision in the tailpiece of Clause 12 (1). I hope that the House will approve the amendment.

    Amendment agreed to.

    Clause 27

    Saving For Other Relevant Legislation

    11.45 a.m.

    I beg to move Amendment No. 37, in page 14, line 31, leave out "which" and insert "or any notice which".

    With this it will be convenient to take Amendment No. 38 in page 14, line 37, at end insert—

    '.; or
    (c) if any service is to be provided wholly or substantially outside the United Kingdom, is authorised or required by the express terms or necessary implication of the law of the country in which the service or the relevant part of the service is to be performed."

    Amendment No. 37 is a small drafting point which is commended to the Government, but it must be a matter for parliamentary counsel to decide whether it has any validity. It was thought to be a possible omission, but, as I said, this is a matter for lawyers to agree among themselves.

    My prime purpose is to move Amendment No. 38, which raises an issue which was discussed in Committee and which remains a matter of great importance in the context of the Bill. The amendment is intended to limit the liability of those providing services abroad in countries where the provisions of United Kingdom law would not necessarily apply and where, as a result, those providing the services might be under a greater liability to their clients than their contractors would be to them and, therefore, would have no hope of recovering the compensation for which they might be liable in the United Kingdom.

    It is clear that this matter applies to all those providing services abroad. By nature of that definition, it must embrace the travel industry providing foreign holidays. It is on behalf of the Association of British Travel Agents, the recognised representative body for the travel industry in this country, that I move the amendment.

    The principle of limiting liability in this Bill, which otherwise seeks to make it impossible for liability to be excluded entirely except in certain circumstances on the ground of reasonableness, is already written into the Bill by a clause introduced by the Government in Committee to take account of internationally agreed conventions. That was no doubt due to the need to observe international law. That may be the most important purpose, but it has the subsidiary effect of limiting liability.

    In the two principal conventions of which account is taken by Clause 27—the Warsaw Convention for air travel and the Athens Convention for shipping—we see that liability has been limited directly as a result of the need for individual countries to come together and agree a common standard of liability and, therefore, compensation. That principle is recognised in those terms.

    This amendment seeks to carry that principle a little further—not in character, but in degree—to those areas where it is not possible to agree an international convention, on matters which would not be proper for such an agreement.

    In the Warsaw Convention, for example, there is a need for a common practice to be observed in the carriage of passengers by air throughout the world by international airlines, scheduled or otherwise. There is, therefore, a prime need for countries to agree what is reasonable, but that is not unlimited liability.

    The concept of limited liability is not foreign to this country. For a start, it is the basis of our commerce and business. There is a need for limited liability. Under the Warsaw Convention, passengers by air have their potential compensation limited by international law. That is written into the Bill. Accommodation has been made for it and presumably there is no objection to that principle. Why, therefore, should there be any objection to that principle being extended to other services that might involve the risk of death or injury in relatively remote places? That possibility is not covered by the Bill as it stands.

    As background to the amendment, I should like to mention that the Association of British Travel Agents does not quarrel with the principle of the Bill. It welcomes and supports it. Indeed, ABTA has already taken action in collaboration with the Director General of Fair Trading to introduce a voluntary code of practice for its members that excludes some of the exemption clauses that had previously existed.

    I can give three examples of that. The first is that there should be no exclusion of responsibility on behalf of the tour operator to be diligent in his duties to his client. Secondly, there is a ban on any attempt to avoid responsibility for misrepresentation by the tour operator or his agents. Thirdly, there is a bar on seeking to prevent holidaymakers from making complaints after returning from holiday, provided that the period after return is Jess than 28 days. In these ways, the tour operators, though ABTAs have already taken action to avoid the kind of situation with which the Bill deals.

    Earlier, the hon. Member for Hemel Hempstead (Mr. Corbett) raised a point about arbitration. Arbitration has already been carried out through voluntary agreement. Of course, any system of arbitration implies that the arbitrator will find in favour of one party or another. That cannot be held as a criticism of the system of arbitration. The hon. Gentleman might have pointed out that sometimes the arbitrator finds against the complainant, although, to be fair, sometimes the complainant may be in the right and sometimes the other party. That is the principle and essence of arbitration. In all these ways the travel industry has taken steps to display a reasonable degree of responsibility towards its clients. It is, of course, in the industry's own interests to do that.

    However, I must return to the particular point that is causing great apprehension and anxiety. If, for example, there was a case of food poisoning that led to the death of a holidaymaker in a foreign country, that might have the following effects. In country A, if a holidaymaker died as a result of poisoning in a hotel contracted by the operator, and under the law of that country there was no limitation to the liability of the hotelier, the tour operator could not rely on a clause in his contract with the client to limit his liability. Therefore, the Bill would not affect that situation. If the same thing happened in country B and if, under the law there, the hotelier's liability was limited, then the tour operator could rely on a clause in his contract with the client to limit his liability to the same level as that of the hotelier. If in country C the hotelier was under no liability whatsoever, the tour operator could rely on a clause in his contract with the client excluding liability. Those circumstances could arise out of a case of food poisoning because an international convention could not be considered to cover that matter. Similarly, a holidaymaker could be killed in a lift or in the coach taking him to his hotel.

    It is contended that this amendment is simply a logical extension of Clause 27, because without it a tour operator could be sued in this country and could be liable for greater damages than he could recover from the hotelier abroad. The amendment does not seek to transfer liability but to limit it.

    This point was made in a letter of 29th March 1977 that was sent to the Chief Executive of ABTA by the Department of Prices and Consumer Protection. The point was made in relation to air travel and is germane to this matter. It said:
    The Bill will not affect the limitations on a carrier's liability to a passenger under the amended Warsaw Convention. Moreover the Bill will not affect the limitations on a tour operator's liability in respect of carriage by air which are provided by the Carriage by Air (Supplementary Provisions) Act 1962. That Act imposes the same limits on the liability of a person who makes an agreement for carriage governed by the amended Warsaw Convention with a passenger, as the 1961 Act imposes on the liability of the actual carrier. Thus tour operators who undertake to carry passengers by air and arrange for another to perform the contract will be under no greater liability than the actual carrier."
    That is precisely the purpose that this amendment extends to hoteliers and coach operators abroad. The tour operator's liability should be limited to the level at which he can hope to recover damages from the person to whom he has contracted that service. There is a real problem here for the operator because otherwise he will not be able to escape the provisions of the law of another country.

    After the DC10 crash in Paris, because the passengers on that aircraft were international in character their relatives were able to band together and to file a suit in California because they knew that the local law there was particularly generous in such cases. As a result of that, a settlement on handsome terms was reached with the aircraft manufacturers. However, aircraft manufacturers in California are a long way from the individual tour operator in the United Kingdom, who might find the level of compensation—if the Bill is not amended—absolutely penal and unthinkable.

    Tour operators would have two alternatives. One alternative would be not to trade in those countries where the law might be said to be deficient by our standards, and where liability is limited. The other choice would be to insure against the possibility of such a calamity. In that case, I imagine that the premium that a tour operator would have to pay to insure against the potential risk of being unable to recover damages in a foreign country would be astronomic. In order to remain in business and to be profitable, the operator would inevitably—as is always the case in matters of consumer protection—have to pass on these premiums, which might be penal, by way of prices.

    I put this forward as a fair point for consideration. I doubt that the client would necessarily want that to happen. He might prefer to pay a lower price and to assess his own degree of risk before embarking in a perhaps rather adventurous holiday to one of the less developed countries.

    The hon. Gentleman said that the insurance premium in such a case might be penal. Has he received any assessment from an insurance company of what might be involved and how much might be added to the price of, for example, a typical holiday in Spain?

    No. I have not been to the insurance companies to inquire about such a case but I am sure that all hon. Members must realise that the premiums would be high because loss of life or injury is involved.

    I must mention in passing that the industry is not seeking to avoid responsibility in providing the services that are described in good faith in its brochures. For example, it is now an offence under Spanish law for a hotel to overbook its clients and to put them in another hotel. Tour operators are not seeking to avoid the law on overbooking, because they know that they can recover damages from the hoteliers should such an event occur. However, I am now referring to matters of death and injury. The assessment on a man's life may amount to hundreds of thousands of pounds—as was demonstrated by the damages awarded after the DC10 crash. I am sure that the insurance premiums against such a risk would be considerable and that the price of those premiums, whether small or large and I suspect that they would be more rather than less—would have to be accommodated in the price charged by the operator. 12 noon.

    If that is so, the holidaymaker might prefer to take out extra life assurance. When he is travelling by air he knows that under the Warsaw Convention he is covered for a certain amount of compensation, but he has an option. In the old days, someone could put a florin in the slot and get £1,000 worth of extra life insurance and gradually build it up. That was a consumer choice that was available to the holidaymaker. My fear is that, if the Bill goes through without taking account of that, the traveller will be faced with insuring against risk whether or not he likes it, and that might be to his cost.

    I ask the Minister to give serious consideration to what I believe is an important point which does not cut across the principle of the Bill, except to the extent that the Government have already cut into that principle by taking account of internationally agreed limits of liability under the Warsaw and Athens Conventions. The Minister has that opportunity and I hope that he will give it further thought, otherwise there could be a serious injustice to those who, in good faith, endeavour to provide services abroad, by running them into risks that are unreasonable and from which they could not exclude themselves under the terms of the Bill.

    Let me deal first with the analogy that the hon. Member for Romford (Mr. Neubert) drew between the problems of tour operators and the DC10 crash when damages were recovered in California at a higher rate than they would have been in the United Kingdom. That might be a problem for the manufacturers of aircraft, but I do not think that the hon. Gentleman can pray in aid of the amendment and the problems of tour operators that larger damages were claimed against McDonnell Douglas because it was possible to sue that firm in the United States. Nobody is suggesting—the Bill is not—that tour operators should be liable for larger damages than those for which they would normally be liable under United Kingdom law. I think that the argument about the generous damages given in some American States is irrelevant.

    I have heard from ABTA. I under stand that its amendments are designed—I say "designed" because they do not have that effect—to protect travel agents and tour operators where their subcontractors commit torts abroad. It claims that if the travel agent or operator is held to be liable for those torts, he should be entitled to any benefit from any limitation—the hon. Gentleman used the word "limitation"—of the liability which the law of the place of the accident might confer on the sub-contractor.

    I said that the amendments were designed to have that effect, but they do not do so. The effect of the amendments is that if a service is to be performed in a foreign country, a contract term or notice exempting the operator from liability—exempting, not limiting—will not be subject to control if it is authorised or required by the law of that country. That would not be an acceptable situation.

    The Bill follows the general principles of private international law. Generally, the controls will apply where the law most closely connected with the contract is the law of one of the parts of the United Kingdom, and I see no reason why exemption clauses in travel agents' or tour operators' contracts should be governed in any respect by a foreign law where the law most closely concerned with the contract is the law of England, Scotland, or Northern Ireland.

    Let me give one example of the effect of these amendments. Let us suppose that a British tour operator owns and runs a hotel in Greece and includes a term in his contracts with holidaymakers exempting—I emphasise that—him from liability to them. A British holidaymaker, who will usually have made the contract with the operator in Britain, is killed through the negligence of the hotel staff. The effect of these amendments would be that if Greek law authorised terms excluding the liability of hotel owners the tour operator could rely upon the exemption clause, and there would be no reasonableness test at all.

    I now turn to what I understand ABTA to be wanting by the amendments. ABTA claims that if the subcontractor of a tour operator causes injury to a holidaymaker, the tour operator should be entitled to any limitation—as the hon. Gentleman properly put it—of liability imposed by the law of the place of the accident. In a letter to me, ABTA said:
    "there is, of course, absolutely no question of tour operators or travel agents seeking to evade any liability which is properly theirs."
    But that begs the question. If English law lays down rules as to liability, and if according to those rules tour operators are liable, that liability is properly theirs. There are general rules of private international law which determine issues such as these. The Bill controls contract terms and notices. It is not intended to change rules as to liability. I think that the amendments are misconceived, and I hope that the House will reject them.

    The hon. Gentleman seemed to pray in aid the exceptions in the Bill in respect of international conventions, but I think that there is a difference in principle. Let us consider the Warsaw Convention. That is law that applies in the United Kingdom and in the foreign place, so the rules are the same in the United Kingdom and in the place abroad, and it is right to preserve those rules. If a holiday is being run anywhere abroad—from Afghanistan to Zanzibar—and there are limitations of liability in those other countries, which by their nature will probably be totally unknown to the person who is booking a holiday, I do not see any reason in principle why English law—and Scottish law for that matter—should not impose a liability according to the law of this country. That will not lead to excessive damages being awarded. It is not the same as the DC10 case.

    The travel operators say that
    "there is, of course, absolutely no question of tour operators or travel agents seeking to evade any liability which is properly theirs."
    The law imposes a liability upon them. I do not think that it is an excessive liability, but it is one which properly belongs to them because they have greater knowledge of the conditions in another country. I think that it would be unwise to alter that proposition.

    The amendments have the effect not of altering that proposition but of loosening considerably the protection that would be enjoyed by the holidaymaker by, in some cases, giving total approval to exclusion clauses, whether or not they are reasonable, if they are required or authorised by the law of another country. I hope that the hon. Gentleman will not press the amendments.

    I am considerably disappointed with the Minister's reply, not only the terms of it but his failure to grasp the point that I am making, which I do not think is challenged by anything that he said.

    International conventions for the carriage of passengers by air are the means by which different standards of liability in different countries where international aircraft operate are accommodated within one common standard. I have already cited a letter from the Minister's Department about how this affects part of the holiday provided abroad, namely, the air travel there and back. This is covered by a convention, and it is therefore already subject to a limitation. It is not being fair to the consumer to contend that he would have unbridled protection against any possible danger or risk that he might encounter, because the liability is limited in terms of air travel.

    What ABTA is arguing, and what I am putting to the Minister, is that to carry the holiday that stage further to the activities in the country abroad where the holiday is provided is an extension in logic. It seems illogical that no limitation is to be placed on the liability in that country where the holiday is provided, but there is a limitation on the liability for transporting the passenger from here to that country and back again.

    There is this difference in the case of the international convention. It is a convention which the consumer's Government—the United Kingdom Government—have negotiated and to which they have assented. The hon. Gentleman's proposition is that a limitation in a foreign law to which neither the consumer nor his Government have consented should, nevertheless, be prayed in aid by the British travel tour operator who has made a contract that is otherwise governed by British law.

    I entirely endorse all that my hon. Friend said. I greatly hope that the hon. Member for Romford (Mr. Neubert) will withdraw his amendment. His analogy with areas in which conventions apply, such as air transport and shipping, is not as valid as he suggested. The circumstances with which we are dealing are those which a person going on holiday to the Lake District or Scotland or Wales might find. He will be concerned with the sorts of buildings that he goes to, the fire precautions, the risk of accidents, the hazards that he might encounter, and the losses that he might suffer.

    The chance of our having a convention covering such areas is no doubt one about which the hon. Member and others in the air transport industry are concerned and on which they are working. But the risks here are not as serious as those which prompted nations to get together to deal with the problems of transport by air and sea.

    I hope that the hon. Member for Rom-ford will accept that the average British person going on holiday abroad, attracted by the seductive and well-produced literature of the tour operators, will expect to have for himself, his wife and his children a degree of protection that he is clearly not offered. By allowing the Bill to stand as it is, there will be pressure on tour operators to look more closely and actively at the conditions under which their sub-contractors perform abroad. This will benefit those who use their services.

    The hon. Member for Peterborough (Mr. Ward) misunderstood my intention in sitting down. I was giving way to the Minister, not concluding my speech.

    I believe that there is a failure to extend the principle that lies behind international conventions to the rather more limited area of the services provided by tour operators abroad. I respect that international conventions have come about because of a need to accommodate the widely varying stan-wards that apply in different countries.

    My amendment seeks to take account of the different standards in countries where the holiday is to be provided. Whereas in the United Kingdom tour operators would be covered against various risks, the operators are seeking recognition of the fact that they cannot, except by insurance at high rates of premium, cover themselves against the risks abroad.

    It is no good contending that the possibility of a person suffering, for example, food poisoning in a foreign hotel leading to death can ever be the subject of an international convention. The possibility is remote. Conventions come about where there is common cause and a common need to cover all passengers in all countries against the risk of fatal accident in an air crash, for example.

    What is sought is a reasonable extension of this principle. Perhaps the letter that the Minister quoted should have said not so much
    "liability which is properly theirs",
    "responsibilities which are reasonably theirs."
    The test of reasonabless does not apply to death and injury.

    I see that I am making insufficient progress to warrant pressing the amendment. I shall accordingly seek to withdraw it, but I urge the Minister to give some thought to this matter before the Bill goes to another place. I contend that there is still a failure to meet a very simple issue of injustice in the Bill as it affects those who seek in good faith to provide holidays abroad in countries that do not have the same standards as apply in the United Kingdom. I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 29

    Citation And Extent

    12.15 p.m.

    I beg to move Amendment No. 39, in page 15, line 12, leave out 'Unfair Contract Terms Act 1977' insert:

    Unfair Exclusion Clauses in Contracts Act 1977'.

    With this we may take Amendment No. 43, in Schedule 3, page 17, line 11, leave out from 'substitute' to 'Act' in line 12 and insert:

    'the provisions of the Unfair Contract Terms'.

    The Minister will be aware of the purpose of the amendment, which is self-evident and non-controversial. The amendment is the fourth attempt to change the Title if one includes the Long Title. This illustrates how legalistic the Bill has been, certainly for those of us who tackled it in Committee without legal expertise.

    My amendment has the support of the National Federation of Consumer Groups. Its purpose is that the Title of the Bill should be more readily understandable by consumers and should be more descriptive. It has often been said that it is no good legislating for consumers if the consumers do not know their rights or how of pursue them. For lay people, the original Title and the subsequent Title proposed by the hon. Member for Peterborough (Mr. Ward) are not as descriptive as they should be and not as descriptive as the Title proposed in my amendment. I hope that the Minister will give this proposal sympathetic consideration.

    Before my hon. Friend the Minister deals with this matter in detail and gives the Government's view, I wish to say to the hon. Lady the Member for Gloucester (Mrs. Oppenheim) that we shall never achieve perfection with the Title of the Bill because there are minor reservations on almost every Title that has been suggested so far. I said in Committee that the present Title was the best that we could get. The Consumers Association, the national body, shares my view that this is the best Title that we have had, even if the National Federation of Consumer Groups, the grass roots organisation, claims otherwise.

    Amendment No. 43, which stands in my name, deals with a rather different issue. It is purely consequential on the change of Title, if it is agreed. It is designed to ensure that Section 55(1) of the Sale of Goods Act is subject to the Scottish provisions of the Bill.

    I understand what the hon. Lady said. If we wanted a really accurate Title we should probably call it the Unfair Contract Terms (Miscellaneous Provisions &c.) Bill, but that would be over my dead body. The difficulty is that one cannot find a compendious Title that accurately sums up in a few words all the provisions of the Bill.

    The Title proposed by the hon. Lady refers only to clauses that are unfair because they exclude liability, but the Bill also deals with clauses that limit liability. It also deals with indemnity clauses which are not in general exclusion or exemption clauses. Further—and I refer the hon. Lady to Clause 3(2) (b)—the Bill deals with a situation where a contract term is unfair, not because it allows one party to exclude liability but because it allows one party to claim to be entitled not to perform the contract at all, or to perform it in a way that is substantially different from that reasonably expected of him.

    The present Title of the Bill is slightly more accurate than that proposed by the hon. Lady, although I do not say that it is totally accurate. I hope that the hon. Lady will not press the amendment. The Bill is to go to another place. I am sure that those in another place will also exercise their minds on this matter. The present Title is as accurate as we can get it and is preferable to the suggestion that the hon. Lady puts forward.

    The Minister's remarks illustrate more clearly than anything else the difficulty that consumers will have in grappling with and trying to understand the Bill and how it is likely to protect consumer interests. I have taken note of all that the hon. Gentleman said, which was not unreasonable.

    I, too, hope that when the Bill goes to another place some of our more distinguished colleagues there will be able to improve on the Title that I have suggested and on the current Title, and that they will do so with considerably more expertise than we have managed so far. I still think that the current Title is not the most desirable.

    I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    I beg to move Amendment No. 40, in page 15, line 15, leave out "(except section 8)".

    This is a purely consequential amendment as Clause 8(2) now amends the Misrepresentation Act (Northern Ireland). The exception in Clause 29 is no longer necessary.

    Amendment agreed to.

    Schedule 1

    Scope Of Ss 2 To 4

    Amendments made: No. 41, in page 16, line 18, leave out

    "As against a person dealing in the course of a business."

    No. 42, in page 16, line 23, after "4",

    insert "and 7".—[ Mr. Ward.]

    Schedule 3

    Amendment Of Enactments

    Amendment made: No. 43, in page 17, line 11, leave out from "substitute" to "Act" in line 12 and insert

    "the provisions of the Unfair Contract Terms".—[Mr. Ward.]

    I beg to move Amendment No. 44, in page 17, line 16, after '1973', insert

    '(as originally enacted and as substituted by the Consumer Credit Act 1974)—
    '(a) in section 14(1) for the words from "conditional sale" to the end substitute "a conditional sale agreement where the buyer deals as consumer within Part I of the Unfair Contract Terms Act 1977, or, in Scotland, the agreement is a consumer contract within Part II of that Act";

    With this it will be convenient to take Amendments Nos. 49, 50 and 51.

    The amendment is consequential. Section 14(1) of the 1973 Act refers to consumer sales. The term "consumer sale" in the 1973 Act is defined by reference to Section 55(7) of the Sale of Goods Act 1893, which is being repealed and re-enacted in the Bill. Hence the substitution for "consumer sale" of an agreement where the buyer deals as consumer within the meaning of the Bill.

    The Consumer Credit Act 1974 reenacts certain sections of the Supply of Goods (Implied Terms) Act 1973. The amendment ensures that when the 1974 Act is brought into force the re-enactment of Sections 14(1) and 15(1) will incorporate the amendment made in the Bill.

    Amendments Nos. 49 and 50 repeal parts of the Supply of Goods (Implied Terms) Act 1973 that are no longer needed. Amendment No. 51 ensures that when the 1974 Act is brought into force the re-enactments of Sections 12 and 15 will incorporate the repeals made in the Bill. The Consumer Credit Act 1974 re-enacts certain sections of the Supply of Goods (Implied Terms) Act 1973.

    Amendment agreed to.

    Schedule 4


    I beg to move Amendment No. 45, in page 17, leave out lines 24 to 27 and insert—

    'Section 55A.
    Section 61(6).
    In section 62(1) the definition of "contract for the international sale of goods"
    This is a purely technical amendment to ensure that the sections of the Sale of Goods Act 1893 not now needed because of the Bill are repealed.

    Amendment agreed to.

    I beg to move Amendment No. 46, in page 17, line 28, at end insert—

    '1967 c. 45.
    Uniform Laws on International Sales Act 1967.
    In section 1(4), the words "55 and 55A"
    In this amendment we come to a redundant reference in the Uniform Law on International Sales Act 1967 and to Sections 55 and 55(a) of the 1893 Act. The sections are repealed by the amendment.

    Amendment agreed to.

    I beg to move Amendment No. 47, in page 17, leave out line 29.

    The amendment removes the provision added to the Bill in Committee which would have repealed Sections 29 and 30 of the Post Office Act 1969. Section 29 excludes the Post Office from liability in tort in connection with its postal and telecommunications services. Section 30 limits its liability in respect of registered postal packets.

    For the attention of the House and those who comment in The Times on these matters, the Post Office is not exempt from liability for its contract services—for instance, certain bulk mail deliveries—or for every item of negligence. For example, if a mail van driver negligently collides with another vehicle, or with a pedestrian, the Post Office is liable for damages. Another example of exclusion of liability that was given by Mr. Bernard Levin in an article in The Times was total rubbish. The Post Office would have been liable under those circumstances.

    The choice before the House is either to reinstate the exemptions with the improvements that I shall mention or allow them to be repealed. In order to make such a decision, the House will wish to consider the consequences if the Post Office lost its exemptions.

    The nature of its activities is unique and I shall give a few statistics. The Post Office handles about 30 million letters each day. They are collected from 125,000 separate points, most of them pillar boxes. The nature of its business, not just the size of its business, means that there are 30 million documents going into the custody of the Post Office each day without any evidence that they have been received into its custody.

    Likewise, 15 milion telephone calls are made. Most of them are dialled automatically. There is no evidence that someone has made a telephone call to a specific destination although there is evidence in terms of charging. In the directories there are about 12 million to 15 million separate entries. The operation of the Post Office is not only of great magnitude but of a rather different nature from other operations. It is also unique in that many of the services are not provided by contract and, therefore, are beyond the scope of what was originally envisaged in the Bill.

    I am not here to defend the Post Office and to say that it is immaculate. Like any other business, the Post Office on occasions fails to provide the standard of service that can be expected by the consumer. Where problems are brought to its attention it will do its best to find a solution. For instance, redirection at the exchange may solve the problem of a wrongly-entered number in a directory. Where a service has not been given or some damage has been sustained, it is a matter of policy for the Post Office to make ex gratia payments. In the past year, average payments of over £8 were made in compensation for lost and damaged unregistered parcels. If a user wishes to insure a letter or a parcel, he may do so through the registered letter and parcel compensation fee schemes. The services are available to all those who wish to use them.

    There is a substantial difference in the cost of sending a registered letter or paying a parcel compensation fee and paying the ordinary charge. The difference illustrates the potential cost not only to the Post Office but, at the end of the day, to the consumer of imposing an across-the-board liability for the operations of the Post Office.

    If the amendment that I seek to delete is retained, we shall fundamentally alter the nature of the Post Office and its operations. It has been suggested in relation to the postal services that in practice it would be so difficult for the postal user to prove that the Post Office had been negligent that loss of its exemption would still leave the Post Office in a very strong position to resist claims for loss However, I understand from my legal advisers that that may not be so and that a court might, in the absence of statutory protection, take the view that proof of posting was sufficient to put the onus on the Post Office to show that it had not been negligent. The administrative effort involved in establishing the position on the part of the Post Office could have serious consequences for its costs and, at the end of the day, for consumers' costs. Ultimately those costs would be reflected in postal charges.

    Indeed, to verify claims it would have to record every item posted and, presumably, take note of the contents in case of subsequent claims. Claims would not merely be limited to the cost of the relevant service but would be made for any consequential loss. But the Post Office does not know what goods or messages it is handling and thus cannot know the extent of its possible liability.

    An alternative would be for the Post Office to insure against claims. I am sure that hon. Members will realise the costs that would be involved in either case. The current cost of a registered letter gives some idea of the charges necessary. In my view it is not in the consumers' interests greatly to increase costs where alternative means of protection are available. A few people, perhaps, would receive large sums of compensation, though at a cost to a great many.

    12.30 p.m.

    I have no wish to over-defend the Post Office. In my view, both the Committee and the House rightly conducted a re-examination of its immunity. Since the Committee looked into the matter and decided to pass the amendment, I have examined the position of post office services in two Commonwealth countries and made inquiries about the situation in Europe and in the United States. All these postal services, like ours, run a large-scale, low-cost postal business, and none is shackled by the sort of liability proposed in the amendment passed by the Committee.

    That is not just the view of the Post Office or the view taken by other countries with similar postal services, some of them great free enterprise countries such as the United States. It is the view also of the Post Office Users' National Council, which considers that exposure of the Post Office to general liability would be to the disadvantage of the consumer.

    If the Post Office exemptions are swept away in a bald manner, there will be a number of consequences which, I am sure, are not intended. Let me give just two examples. Because it does not operate its main services under contract, the Post Office could not invoke the "reasonable provision" open to contracts. Further, Section 28(1) of the Post Office Act specifically prevents the Post Office from including anything in its schemes to limit its liability. Thus, the balance would swing very much the other way.

    Moreover, the loss of Post Office exemptions would flow through to other carriers of mail, for instance, airlines, ships and railways, which would be unable to protect themselves from totally unforeseen and unforeseeable losses, except by insurance, which could be rather expensive.

    I suggest, therefore, that we shall have to look at the matter again in much more detail and on some other occasion consider the general liability of the Post Office. I hope that the House will agree that it is desirable that the Post Office should deal with the undoubted problems which exist in a logical and consistent and as generous a manner as possible. I have had discussions with my colleagues in the Department of Industry as well as with the Post Office Users' National Council, and I have had correspondence with the Post Office too. I hope that something has been achieved which will commend itself to the House.

    The Post Office and the POUNC are about to hold discussions on the relations between the Post Office and its consumers with a view to drawing up a code of practice to which, without increasing the cost to the consumer, the Post Office could work. I claim no great credit for that, but I feel that some credit is due to members of the Committee and to those who have agitated both inside and outside the House for re-examination of the problems of compensation.

    I understand that the Post Office has already agreed in principle to the adoption of such a code. These moves are wholly welcomed and encouraged by the Government. We feel that they would improve the consumer's position in matters such as telephone rental rebates, directory errors and damage to or loss of unregistered parcels. There is no limit on the range of discussions on the code of practice. They could include compensation scales in respect of the registered mail services, for example.

    I assure the House that the Government will consider any proposals arising from these talks, together with any relevant observations made by the Carter Committee. These also will be taken very seriously, although, of course, the Carter Committee's deliberations will have a range far wider than the matter which we are presently discussing.

    Hon. Members may wish to reserve their position generally on the Post Office immunity, but I suggest that, in view of its scale, the matter will have to be considered on some other occasion, and certainly in the light of the report of the Carter Committee.

    Before leaving the question of the code of practice to be initiated between the POUNC and the Post Office, could the Minister say who will finally advise on the drawing up of the code? Will it be somebody independent?

    I cannot give the hon. Lady a definite answer, but my Department has said that it would certainly be willing to offer the services of the Director General of Fair Trading, who has long experience in drawing up codes of conduct. The fact that that help is available has been made known to the Post Office and the Post Office Users' National Council, and I hope that they will be able to call on that assistance as well as any assistance which will be available from my Department.

    I realise that the hon. Lady and other hon. Members consider it important that Post Office consumers should get a fair deal. However, I consider at present that to expose the Post Office to legal liability for its services would be a way of vastly increasing its costs, perhaps to the advantage of a few but certainly to the general disadvantage of most of its users. I am sure that that is not the intention of the hon. Lady or of any other hon. Member.

    I feel that what the Committee wanted will be best fulfilled by the talks which are to be held between the Post Office and representatives of its users. In the circumstances, I hope that the House will feel that an advance has been achieved. There will be other occasions on which one can look at the report of the Carter Committee and the general organisation of the Post Office, and I hope that the House will be content with what has so far been achieved as a result of the discussions in Committee and the comments which have come from outside the House.

    My hon. Friend said that he had consulted the Post Office and the POUNC. Has he also consulted the trade unions involved in the Post Office, or does he intend to do so?

    I have received representations from the Post Office unions which were concerned about the amendment. However, there is no earthly reason why the trade union view should not be expressed to the POUNC. I cannot at the moment recall the full membership of the council, but I am sure that there are representatives on it with a trade union background. I recall that there is a representative on the POUNC who has not a background but a foreground in the Conservative Party, in the person of the hon. Member for Hampstead (Mr. Finsberg). I am sure that the trade union view can be put forward.

    If it be in order, perhaps I might now congratulate the Committee on achieving an advance here. I am sure that it will be welcomed by consumers and in the country generally. This is probably the last major debate that we shall have on the Bill—there is no motion down for Third Reading—and I think that it would be inappropriate if I did not end by congratulating my hon. Friend the Member for Peterborough (Mr. Ward), the promoter of the Bill, on the achievements which he has brought about and by thanking members of the Committee and hon. Members who have taken part in our debates on the Floor for their co-operative and constructive attitude during the passage of the Bill thus far.

    I am sure that the Bill will be widely welcomed not just by consumers but by business men, especially small business men. I feel that we can be proud of ourselves for the way we have been able to achieve not a modest but a substantial reform in the law.

    After those generous words from the Minister of State, I hope that he will forgive my first observation, namely, that his arguments had a familiar ring. Indeed, so familiar were they that I could have sworn that I was advancing them myself not half an hour ago on my earlier amendment.

    The hon. Gentleman pleaded a special case for the Post Office on the ground of the specific and special nature of its operations, and he said that unlimited liability for its operations could involve it in extremely expensive insurance, the cost of which would have to be passed on in charges to its customers. Similarly for the voluntary code of practice agreed by ABTA with the Director General of Fair Trading, there is to be a code of conduct agreed by the Post Office. This is to be done, apparently, in order to cover the points which have been raised, though without bringing it within the context of the Bill.

    I hope, therefore, that the problems of the travel trade also will be borne in mind since it provides a comparable service to consumers in certain respects. I cannot but point out that the case which the Minister has just advanced on this amendment was very much along the lines of the case which I made earlier, and there is considerable similarity between the two issues involved.

    Having said that, however, I have to add that inevitably I have some sympathy with the Minister in the case which he put. In some circumstances, it is proper to take account of the special nature of certain services provided to the public by the Post Office. However, I shall limit what I have to say to a point of concern for airlines such as British Airways and British Caledonian and shippers such as those represented by the General Council of British Shipping regarding how they will be affected once this amendment has been passed.

    These carriers are required by law to carry the mails, and they face the same general prospect as does the Post Office. As things stand at the moment, they could be required to carry packages of unknown value, with unlimited liability, against which they would have to seek insurance for the risks. Since the value is unknown, the insurance premium would inevitably have to be rather high to cover the potential liability. Therefore, once again they would be involved in avoidable expense. I hope that the Minister will comment a little more fully on these matters than he did in passing earlier.

    I have only limited knowledge of ABTA, its membership and organisation, but I know sufficient about the situation to realise that the scale and scope of its operations do not in any way compare with those of the Post Office.

    The House knows of my interest in the Post Office as a former employee and of my involvement with one of the unions which has members in the Post Office. I would like to think that this proposal, which was accepted in Committee but which we are now seeking to remove from the Bill, was put forward out of naivety or facile understanding of the activities of the Post Office. However, I fear that that may not be the case. It may be an attempt to provide the consumer with jam today—or certainly an attempt to persuade him to believe that he will be given jam today regardless of the indigestion that might follow tomorrow. The proposal misleads the public and consumers of Post Office services—and, indeed, if this provision remains in the Bill, those services may ultimately be destroyed.

    The facts are simple. Since there are no individual records of ordinary letters or telephone calls, it follows that it is physically impossible for the Post Office to establish beyond reasonable doubt whether an alleged failure has occurred. On the other hand, if new systems of recording were introduced to identify every postal item or every telephone call, costs would be fantastic. Such costs would have to be passed on to the customer.

    If I may use the postal side of the business as an example, it takes only a moment's reflection to realise that if the Post Office operated without protection from liability, as the hon. Member for Gloucester (Mrs. Oppenheim) proposed, every letter posted would have to be recorded, and it would never again be possible to post a letter in a box. It would be necessary to queue at a Post Office counter for each letter to be receipted. The delivery postman would never be able to drop mail through a letterbox. Somebody would have to be summoned to the door each time to give a receipt for the item.

    12.45 p.m.

    In an operation involving on every working day an average of 33 million letters, each of which is sorted four or five times, and nearly 600,000 parcels, it is easy to see that, if this proposal is agreed, we shall see the end of a quick and efficient postal service. It would certainly mean the end of a relatively cheap postal service. The impossibility of running a similar service on the telephone side of the Post Office's business, with all the recording of calls that is involved, becomes equally apparent.

    The provisions of Sections 29 and 30 of the Post Office Act are necessary if the Post Office is to continue to handle the enormous quantities of mail cheaply and with speed. Because of the scale of the operation to which I have already referred, there are inevitably failures, often for reasons outside the control of the Post Office—or example, incorrect, incomplete or indecipherable addresses, adverse weather conditions, transport failures and other reasons. Notwithstanding this, the service given by the Post Office is of the highest order.

    One would never guess that this was the case if one were to judge only by the constant criticisms which, I fear, are part of the current English disease of self-denigration. I believe that the Post Office services are unmatched anywhere else in the world. Although there may be one or two other countries which can claim next-day delivery for first-class mail of the order of 92 or 93 per cent., no country can claim delivery of mail in the main before breakfast time. I repeat that the Post Office suffers from that curious disease of self-denigration in the media, which tend to concentrate on bad news rather than on achievement.

    The present high standard of service could not possibly be maintained if unreasonable demands were made upon the Post Office. There is not, and could not be, a record of the posting and delivery of each letter and parcel. The means to undertake that work simply do not exist and, as it is impossible in present circumstances to deny a claim that an ordinary letter or parcel was posted or was not delivered, there would be unlimited scope for fraudulent claims.

    In a public opinion survey it was found that 21 per cent. of the firms and 11 per cent. of the private individuals who responded to questions admitted that they had blamed the Post Office when they themselves had failed to post something. Hon. Members are not unused to such claims being made by organisations and individuals when correspondence is awaited.

    There are people who, because it suits a party political line or a news editor's policy, treat the Post Office as if it were a football the kicking of which helps to make the player's reputation. It is time that we defended the Post Office from this kind of treatment, and we certainly should not try to make its job more difficult.

    The Post Office, as has been demonstrated by its willingness to adopt the code mentioned by the Minister, is ever ready to admit faults and criticisms when they are fair. The hon. Member for Gloucester in Committee referred to the dumping of mail by postmen. If she has evidence on that score, she must make it known to the Post Office and not make general attacks on a fine body of public servants, men and women who deliver the mail day in and day out.

    The Union of Post Office Workers has made it clear to me that it holds no brief for those who do not do their job correctly and would willingly help to stamp out any practice of the kind she has described. Indeed, it has co-operated constantly with management in ensuring that activities of that sort are met with the strongest disciplinary action in the Post Office.

    No doubt the hon. Gentleman noticed the discussion in Committee on this point when I mentioned the action taken by the Union of Post Office Workers in withholding mail supplies from a firm called Grunwick. On that occasion the Post Office failed to take any action. What concerned me was that the Post Office should be liable for its negligence in that matter, because the consumer had been gravely damaged. That was one of the reasons that guided my hon. Friends to table the amendment.

    I understand the hon. Gentleman's point, but it is quite different from the one with which I was dealing in the hon. Lady's speech. In Committee she referred to a postman who had been seen dumping the residue of his mail bag instead of delivering it. That was the general accusation that was made, and it was not substantiated. If the hon. Lady has such evidence it is her duty to bring it to the attention of the Post Office. I have already said that the union is anxious to co-operate in stamping out such practices if they occur. However, that was a different point from the one that the hon. Gentleman sought to make.

    I am sure that my hon. Friend will agree that, whilst there is no general criticism here of postmen, there are undoubtedly cases of this sort which have been quoted in newspaper reports. To my knowledge such an incident occurred in my home area on the eastern side of London, and it was therefore legitimate for the hon. Lady to raise that point.

    My hon. Friend has raised a specific case which was mentioned in the Press and where disciplinary action was taken. The hon. Lady's comments were of a general nature and did not refer to specific instances. The Union of Post Office Workers took the view that her comments maligned many of its members, who work solidly throughout the year and who would never dream of doing anything of that sort.

    The House will realise that records of posting and delivery are at present limited to registered and recorded delivery items. These services demand special handling. The combined number per year is the equivalent of less than two days' postings of ordinary letters. The cost of sending a registered letter, most of which is to provide for special handling and not for compensation, is more than six times the ordinary charge for postage. Nevertheless, those services are still run at a loss.

    On the telecommunications side the existing exemptions from liability are made necessary by the sheer scale and nature of the telecommunications business. The Minister referred to 50 million telephone calls handled daily. There are more than 20 million entries in the normal alphabet telephone directories, with 2½ million entries in Yellow Pages and commercial classified directories. Some 3·7 million telegrams are handled annually. Clearly, with an operation of that size failures will arise for a whole host of reasons, many of them outside the control of the Post Office.

    If the Post Office were to be open to claims of negligence for failures of its telecommunications services, it would be exposed to challenge before the courts on a substantial scale. Not all the charges against the Post Office would be fair or true. That accusations would be made on a very large scale is beyond doubt. Telephone charges would have to be increased substantially to cover the additional costs of meeting claims in which the Post Office was proved to be at fault and to cover the administrative and legal expenses of all the cases brought against it.

    Although in percentage terms failures in the Post Office's services are now—only 2 per cent. of all telephone calls fail at the first attempt because of the system, and errors in the telephone directory average out at less than 0·1 per cent. per annum—nevertheless the consequential damage could be very expensive for the Post Office and, in turn, for its customers.

    Will the hon. Gentleman address himself to why the Post Office should not be treated on all fours with the whole of the private sector? The same argument about the number of claims that may be made under the Bill applies to the whole of the private sector and numerically in aggregate would probably be greater than the total of claims that might be made against the Post Office.

    If the customers are willing to pay the extra charges necessary as a result of meeting claims brought against the Post Office—and I stress the figures of 50 million telephone calls daily, 3·7 million telegrams annually, and 20 million entries in the telephone directories—that would be fine. However, I do not believe that the customers would be willing to put up with the enormous costs involved in recording and monitoring calls, as will be necessary if the Post Office is made liable in the way suggested.

    It must be borne in mind that this procedure would be expensive not only in terms of money but in terms of time. Further costs would have to be incurred in introducing procedures to protect the Post Office against fraudulent claims. At the moment it is not possible on the STD system to establish whether a particular telephone call was made. If the Post Office were to become liable for damages for failed calls, each call would have to be recorded and its satisfactory completion or failure noted. Services could not be maintained in their present form under such circumstances, and the cost would be prohibitive even if the resources were available.

    It is not economically practicable to provide postal and telecommunications services which can be guaranteed to be free from failure. Without the protection of Sections 29 and 30 of the Act the Post Office would be open to challenge before the courts on a very substantial scale. Despite the relatively few cases of failure in an operation of this immense size, the actual numbers are considerable and the cost of defending legal actions, which would have to be passed on to the public, would be substantial.

    Without exemption, the Post Office's liability for consequential loss would be almost limitless—consider the loss or late delivery of a "winning" football pool coupon, or a failure resulting in the collapse of a multi-million pound contract. Furthermore, the potential losses are unrelated to the charges for the services in question. The repeal of Section 29 of the 1969 Act would destroy the current reasonably cheap, fast and reliable postal and telecommunications services, and in the end the customer would have to pay considerably more for, perhaps, a worse service.

    I apologise to the hon. Member for interrupting him yet again, but he has overlooked one important point. The Post Office would be liable not for failures but for failures in which there was negligence, and that negligence would have to be proved. That cuts down the number of incidents about which the hon. Gentleman is talking.

    It might cut down the number of cases in which the Post Office was found guilty, but not the number of cases in which action was taken against the Post Office. Nor would it cut down the precautions which the Post Office would have to take were it to be made liable in the way that the hon. Gentleman wants. The position would be precisely that recognised by the Law Commissions. It would cost the Post Office more to cover the risk of loss or damage than the loss would cost the customer, and the Post Office's costs would have to be passed on to the customer.

    The position in other countries is broadly the same as in the United Kingdom and is reflected in the Universal Postal Convention, which exempts postal administrations from liability in respect of letters not registered. So no other administration would pay compensation if it lost or delayed an ordinary letter to or from the United Kingdom.

    Alternative services providing for compensation are available for those who want them and who are prepared to pay additional fees—registered letters, compensation fee parcels, recorded delivery letters. Evidence suggests that the average user prefers to accept the present very low risk at low cost to the alternatives at even low risk but vastly higher cost and greater inconvenience. Why should he be forced into paying higher prices? On the telecommunications side premium services as such are not available to the average customer, but services can be tailored to the customer's needs to offer extra protection at extra cost, and there is no evidence of any general demand for a general service parallel to the registered post.

    Despite the Post Office's exemptions from liability, its reliance on these exemptions is in fact open to scrutiny. An aggrieved person can complain to the Post Office direct. He can also appeal to one of the four statutory users' councils—the Post Office Users' National Council or the users' councils for Scotland, Wales and Northern Ireland. They are probably the most vociferous of all the consumer councils in the nationalised industries. He can also, of course, take up the matter with his Member of Parliament, as many of us can testify.

    1.0 p.m.

    I hope that my hon. Friend will not go so far as to suggest that we have at present a state of perfection. What he is saying is getting precious close to that. I hope that he will recognise that there are areas of concern which should be explored in the consumer councils and the Post Office. I hope that he will not paint too white a picture of the present situation.

    If my hon. Friend had been listening earlier, he would have heard me acknowledge that there had been failures and that there would be failures. I do not think that a defence of the Post Office comes amiss in this day and age. The public are made well aware of the criticisms that are made loudly and clearly by hon. Members and in the Press by journalists and others. I do not think that one person putting the other side of the argument, pointing out some of the positive achievements of the Post Office, comes amiss.

    The Post Office's policy has always been to make amends, as far as it is able, to a consumer who has a genuine grievance. It can and does make ex gratia payments. On the postal side, regional directors have authority to make ex gratia payments where loss or damage was due to causes entirely outside the normal risks of transit or to some gross dereliction of duty by Post Office staff.

    If a mistake has been made over a telephone number, for example, it is the general policy to offer changed number cards, or to pay for over-printing of stationery. In some instances Press advertising may be paid for to help rectify the fault. Similarly, rental rebates may be made when lines are out of order.

    From what source is the hon. Gentleman quoting at the moment? He appears to be reading.

    From my experience of working in the Post Office for three and a half years, I do not have to have any sources for information of this sort. Compensation is paid to people for failures on a fairly regular basis throughout the country. Obviously, people who obtain redress for failures of service where a failure has been made on the part of the Post Office do not come to the hon. Gentleman or his association to complain against the Post Office.

    In conclusion I return to a point made by the Minister. If the Bill is enacted as it stands, the Post Office will face a major difficulty. Under Section 28 of the Post Office Act the Post Office cannot include in its scheme any clause which limits liability in negligence for the majority of its services, although all other suppliers will be able to do so, provided of course, that their exclusion clause is reasonable. The Post Office will then be in a worse position than any other supplier of services and will be unfairly and exclusively discriminated against by the Bill.

    The adoption of the code to which my hon. Friend has referred shows the willingness of the Post Office to respond to criticism and to help redress customers' complaints. For that reason, and for the others that I have outlined, I hope that the House will support my hon. Friend's proposed amendment.

    There is perhaps some irony in the coincidence that in the same week as the Government propose to reinstate in this Bill sections of the Post Office Act which are perhaps adverse to the interests of the Consumers—in other words, to repeal the amendments passed in Committee—they are proposing, in another piece of legislation, to put consumers on the Post Office Board.

    But if the position of the Government is ironical, the position of the Liberal Parliament is even more so, because it is said that it has urged this measure on the Government. The one hon. Member from the Liberal Party who sat in Committee voted against the amendments that the Conservatives moved. In fairness, I must say that the sponsor of the Bill did not do so. Yet those amendments were designed to give the consumer more protection. I hope that throughout the country consumers will have noted the double standards of the Liberal Party as far as they are concerned.

    It is very hard to find Liberals anywhere today.

    I listened carefully to what the Minister of State said. Despite what he and the hon. Member for Thornaby (Mr. Wrigglesworth) and other respresentatives of the Post Office have said—I am not including the Minister as a representative of the Post Office—I do not believe that the Post Office would be as vulnerable under our amendments as hon. Members have suggested.

    The hon. Member for Thornaby claimed that we are trying to gain jam for the consumers today. I say to him that we are not trying to obtain jam for them but merely to get for them the services for which they pay the Post Office. We are not trying to provide any blanket exclusion of limitation of liability in the case of the Post Office. The hon. Gentleman was rather selective in his quotations from what I said in Committee. I explained there that all that the Post Office would have to do, if our amendments were allowed to stand, was merely redraft its existing exclusion clauses so that they were fair and reasonable, just as other undertakings will have to do once the Bill becomes law.

    It is excluded by statute from doing that, which is one of the difficulties.

    I noted that the hon. Gentleman had said that, but I thought that it was only in relation to contracts and not in relation to schemes. This is because it had, at least before our amendments were made, exclusion clauses, and these limited its liability under schemes and not under contracts. All I am saying is that these exclusion clauses could have been modified without our amendments. I think that the hon. Gentleman would agree with me there.

    It is for this reason that the Law Commission did not recommend the exclusion of the Post Office from this measure. The Law Commission sat for a long time considering this measure. However, there have been hints that, if the amendments were to stay in the Bill, the Bill might be lost altogether. It is a useful consumer measure, and I would not like that to happen, although I deplore the fact that such hints should have been dropped, because I do not think that it is the function of the Department of Industry—if that is where the hints came from—to tell anyone in another Department that he cannot have a piece of consumer legislation because something in it does not suit the particular interest of the Department of Industry.

    But at least, as a result of carrying our amendments in Committee, we have forced the Post Office and the Minister to recognise the need for reform, and that is a very important point. We have gained very considerably for the consumer by way of the alternative that the Minister of State has offered today. As far as I understand it, as a result of what he has said, a code of practice is to be drawn up, with the help of the Director General of Fair Trading, which would not have been drawn up or consented to by the Post Office if we had not carried our amendments.

    Credit is due also to the Minister of State for recognising this situation and for initiating such an agreement. I have been told that, for years, the Post Office has refused even to discuss the question of the adverse effect on consumers of exclusion clauses that it has. Yet, in the very short period of weeks, after our amendment was carried the Post Office, having refused for years to discuss the question of exclusion clauses, has negotiated with the Minister the possibility of a code of practice.

    What does the Lady mean by "refused to discuss"? I recall that the Post Office Users' National Council has raised this issue on previous occasions and that there have been discussions with the Post Office. I remember also that during the passage of the Post Office Act there were also considerable discussions about this matter.

    If what the hon. Gentleman says is correct, I must have been misinformed. But it is certainly very noticeable that since our amendment was carried the attitude of the Post Office has considerably changed. This is the first occasion that it has offered to discuss a voluntary code. Only today, six weeks after our amendment was carried, I have received a letter from Sir William Ryland.

    I am sure the hon. Lady will be interested to know that as sponsor of the Bill I have had no communication of any kind from the Post Office.

    I am horrified to hear of that. It is a measure of the arrogance for which the Post Office has been criticised in the past that on the very day that the Bill has come before the House I should have received a letter from the Chairman of the Post Office Corporation at the bottom of my pile of post which was opened less than an hour before my coming into the debate.

    It may be of interest to my hon. Friend to know that when the Post Office Bill was going through Standing Committee in 1969 the then Minister, who of course is now in prison, when challenged to explain the monopoly situation of the Post Office, gave the immortal historical justification that—as can be read in Hansard

    "The monopoly is the monopoly is the monopoly."—[Official Report, Standing Committee D, 13th February 1969; c. 754.]

    I am grateful to my hon. Friend for that intervention because it sums up beautifully the situation that I was trying less successfully to describe.

    Having congratulated the Minister on negotiating this compromise with the Post Offices I would say to the House that we shall want to scrutinise this code of practice very carefully indeed. The need for reform is very great, as I knew when I moved our amendment in the first place. However necessary I may have thought that amendment was, my resolve has been strengthened one hundredfold by the many hundreds of letters that I have received from consumers all over the country with justified complaints about the Post Office.

    The hon. Member for Thornaby declared his interest in that he was representing the case of the Post Office and a Post Office union. I hope that he is also representing the interest of the consumers in his constituency, who are having very great difficulty on many occasions, like many other consumers, with regard to Post Office services.

    The hon. Gentleman particularly referred to the question of paying extra for recorded delivery or insurance and that this was an insurance for consumers. I would read one of the many letters that I have received from a lady who used the recorded delivery service. She said:
    "My daughter's passport/visa and airline ticket to Lagos Nigeria were posted to her from London on Tuesday 12.4.77 by recorded delivery. She is still waiting for them to arrive at her home."
    That was on 21st April—and I understand that these documents were carefully and correctly addressed—
    "I am taking this opportunity to write to you on behalf of my daughter and myself in view of your concern over matters such as these. My daughter was due to take up a post as lecturer at Lagos University on Mon-day 18.4.77, and I was going out for a holiday. Consequently we have had to cancel the flight, lost out on coach fares to London, I can't claim a penny refund. We've had a tremendous expense".
    Our amendment is not concerned with vast sums of money. It is not concerned with the person who has not sent his football pools coupon or a substantial cheque. It is concerned with these cases of minor expense which are of great importance to consumers and may involve only the cost of a stamp.

    I am sorry to interrupt the hon. Lady again. I assume that the person concerned is taking the matter up with the Post Office. But at the moment we cannot even assume that it is at fault. The hon. Lady has not told us whether any investigation has been carried out. I am sure that the Post Office would be prepared to compensate that lady for the loss which has occurred. But at this stage it is not clear that the Post Office is at fault.

    1.15 p.m.

    The hon. Gentleman is right in his supposition. I took this particular case up with Sir William Ryland, and that was the matter to which he was replying in the letter which, incidentally, included his other remarks about our amendments. I wrote to Sir William on 29th April and he has written back to me to say that he is still investigating. The outcome of this case is not known. But even if we are successful in gaining recompense for that lady, I wonder whether she herself would have gained recompense had she applied as an ordinary member of the public.

    My hon. Friend may be interested in a constituent of mine who sent a letter from Romford to the City of London which took five days to arrive and which as a result has involved him in extra liability for tax to the tune of £170.

    I am grateful to my hon. Friend, because Post Office consumers are among the most dissatisfied consumers in the country with regard to both postal and telephone services. Naturally the vast majority of Post Office employees work diligently and are not negligent. Many of them work above and beyond the call of duty. However, there are too many examples of negligence, albeit on the part of a minority of workers. For example, there can be no excuse whatever for the misdelivery of a perfectly clearly addressed letter. There is no question of that at all.

    It may be a momentary aberration, but there are too many cases where the Post Office seems to be complacent. The intervention of the hon. Member for Thornaby was a singularly complacent one on behalf of the Post Office Corporation. Numerous examples have been given to me in the letters that I have received from Post Office users where they have been excluded from taking justified action which they could have taken if the Post Office did not have the protection that it will have when our amendments are repealed. Many of these situations could, and I hope will, be remedied by a fair and effective code of practice such as the Minister has described.

    I learned today that managers have discretionary powers to make amends in many cases, but most consumers do not know of these discretionary powers. Why does not the Post Office publish this more widely so that consumers can be aware of the fact that managers have discretionary powers to make amends in order to make sure that they themselves can regain compensation along these lines? That is an important point, and it is important that it has been raised in the House today. I hope that the Post Office will use the opportunity to make it more widely known that this service is available. After all, why should the Post Office be able to exclude itself from the responsibility for the service that it is selling, in a way in which no other member of the private sector will be able to exclude itself after the passage of this Bill?

    The Minister of State has helpfully told us some of the areas in which the voluntary code may operate. I am entirely in agreement with the areas that he has proposed. But there are many other ways in which the Post Office should operate, such as when there are wrong insertions in the telephone directory where wrong numbers are given. All that has to be done is for the number to be blocked by the operator and intercepted and rerouted to the right number. This service should be automatically offered to those consumers who have wrong numbers inserted in telephone directories.

    I shall not go into great detail. But the amusing article by Bernard Levin in The Times summed up the whole situation particularly well. I also read with great interest the defence put forward by 'the Post Office in a letter the following lay. That defence only partly answered the argument put forward by Mr. Levin. It correctly pointed out that Mr. Levin had gone too far in saying that death or injury would not be recompensed. But it did not deal with his other points. If there is a problem over the burden of proof, it is equally difficult for consumers to prove that they have actually posted the letter or made a phone call. The burden of proof is equal to both sides.

    The question of death and injury is in any case not affected by this amendment because the Bill does not exclude under any circumstances compensation in the case of death and injury. I fear that Mr. Levin would not be satisfied with the compromise that we shall settle for today. However, I believe that we have gained a great deal by means of the alternative that the Minister has offered. We have perhaps gained even more by the helpful attitude of the Minister in recognising that the Post Office is far from perfect.

    I shall now give a positive undertaking on behalf of the Conservative Opposition that as far as we are concerned this compromise, while welcome, is conditional, The Post Office is on trial. We shall wait to see the contents of the code of practice and how faithfully it is carried out, and we shall study consumer reaction very carefully. If we remain dissatisfied, once again we shall move an amendment to repeal Sections 29 and 30 of the Post Office Act when Post Office legislation is introduced, as it is likely to be following the report of the Carter Committee. I am sure that, in moving such an amendment in these circumstances, we shall have the support of the overwhelming majority of right hon. and hon. Members.

    Finally, may I join the Minister of State in congratulating the hon. Member for Peterborough (Mr. Ward) on the way in which he conducted the Bill through Committee and also for having the good sense to introduce such a useful and welcome consumer measure in the first place? I also congratulate all those hon. Members concerned on what was a very constructive Committee stage. We are grateful to the Minister of State for having allowed us to keep many of the substantial amendments that we won in Committee which, in our view, render this a very much more useful consumer measure than it was when originally it began its passage through the House.

    Along with Mr. Bernard Levin, I am not in the least happy about the compromise which has been made. However, I accept the leadership and guidance of my hon. Friend the Member for Gloucester (Mrs. Oppenheim), although I predict that it is almost certain that we shall have to reimpose this amendment when the Carter Committee has reported and new legislation is introduced.

    I might add that, in my view, the reply by the Post Office Secretary to Mr. Bernard Levin was quite inadequate. It answered his arguments but failed totally to meet the substantive point which he made.

    Amendment agreed to.

    I beg to move Amendment No. 48, in page 17, line 29, at end insert—

    '1972 c.33.
    Carriage by Railway Act 1972
    In section 1(1), the words from "and shall have" onwards.'
    The repeal of part of Section 1(1) of the Carriage by Railway Act 1972 is necessary because it refers to Section 43(7) of the Transport Act 1962, which is being repealed.

    Amendment agreed to.

    Amendments made: No. 49, in line 30, c. 3, at beginning insert—

    'Section 5(1)
    Section 6
    In section 7(1), the words from "contract for the international sale of goods" onwards.'

    No. 50, in line 31, at end insert—

    'Section 13.
    In Section 15(1), the definition of "consumer sale".'

    No. 51, in line 31, at end insert—

    The repeals in sections 12 and 15 of the Supply of Goods (Implied Terms) Act 1973 shall have effect in relation to those sections as originally enacted and as substituted by the Consumer Credit Act 1974'.—[Mr. Ward.]


    I beg to move Amendment No. 52, in the Title, line 4, after 'other', insert 'breach of'.

    If I may risk being out of order on such a simple amendment, I should like to express my thanks to the House, especially those hon. Members who served on the Standing Committee, who gave such concerned and interested attention to this very complicated Bill, which for those of us who are not lawyers was a very difficult one with which to deal. I am especially grateful to my hon. Friend the Minister of State and to those to whom we are not really supposed to refer in this place—those civil servants in the Department at all levels who have worked so hard and long on this Bill, which we believe marks a substantial improvement in the law of liability affecting the consumer.

    The amendment affects the Title. Hon. Members will see that the words in the Bill,
    "civil liability for breach of contract, or for negligence or other duty",
    express the intention rather badly. The amendment clarifies the position by saying "other breach of duty".

    Amendment agreed to.

    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 ( Third Reading), and agreed to.

    Bill accordingly read the Third time and passed.

    Unfair Dismissal (Overseas Employment) Bill

    Order for Second Reading read.

    I understand that this Bill has not yet been printed. Therefore, in accordance with precedent, I must decline to put the Question, "That the Bill be read a Second Time".

    Second Reading what clay? No day named.

    Protection Of Voluntary Work Bill

    Order for Second Reading read.

    Dunfermline College Of Physical Education For Women (Change Of Name) Bill

    Order for Second Reading read.

    European Parliament (Membership)


    That Mr. Geoffrey Rippon be designated a Member of the European Parliament:


    That this Order be a Standing Order of the House.—[Mr. Thomas Cox.]


    Resolved, That this House do now adjourn.—[ Mr. Thomas Cox.]

    Adjourned accordingly at twenty-six minutes past One o'clock.