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Supply Of Goods And Services Bill

Volume 21: debated on Friday 2 April 1982

The text on this page has been created from Hansard archive content, it may contain typographical errors.

As amended, again considered.

Question again proposed, That the amendment be made.

11.23 am

Had the hon. Member for Caithness and Sutherland (Mr. Maclennan) concluded his speech?

Having listened to the Solicitor-General for Scotland and the subsequent exchanges, I am happier with the legislation than I was earlier. That does not mean that I am unhappy about the Bill.

I congratulate the right hon. Member for Sunderland, North (Mr. Willey) on introducing an advance in consumer protection. I am not a lawyer, but I am jealous of the separate Scottish legal system. I should be opposed to legislation with Scottish provisions tagged on as a tail. Scottish legislation should be drafted with the Scottish legal system and Scotland's interests in mind. In recent years there has been much instant legislation, thought up on the wing. Before a measure makes the statute book it should have had the benefit of careful and thoughtful review.

Scottish consumers will be disappointed that they are not included in the Bill. If I had to make a choice between giving them that protection now and awaiting the result of a well-thought-out review of the existing position, I should opt for the second proposition. Now that the Scottish Consumer Council and consumers generally are aware of the protection to be given in England and Wales, the Government should feel obliged to ensure that similar protection, apposite to Scottish circumstances, is afforded to Scottish customers as soon as possible. I do not see much wrong in the Government's waiting until they have the report from the Scottish Law Commission. The commission is engaged in an examination of the law of diligence, an importance matter.

There is no evidence that the Government have sought to obstruct the Bill. The right hon. Member for Sunderland, North has said that he has received every assistance. I am sure that there is no Government plot to leave out Scotland, just for the sake of doing so.

The Scottish customer has a right to expect protection as soon as possible. I hope that the Solicitor-General for Scotland will press the Scottish Law Commission to make its recommendations as soon as possible. The hon. Member for Norwood (Mr. Fraser) made a reasonable request when he asked for a Government commitment to implement the commission's recommendations.

I am mildly surprised that the right hon. Member for Western Isles (Mr. Stewart) is so satisfied with a measure that has such an adverse effect on Scotland. During the Committee stage of this little Bill the Scottish question was agreed on non-party lines. It was thought that that was a considerable achievement; that the Government had seen the light and realised the dangers inherent in having a measure of such an important nature applying to England and Wales but not to Scotland. I hope that I can provide an exact analogy of the situation.

Let us suppose that a Scottish family is on holiday in England. The mother goes into a shop and buys an article. She finds that there is a defect in it and returns it to the shop. There is no problem, because she is covered under the Bill. If she does that in Scotland, she is told, much to her consternation, because she does not think that Britain is two separate countries, that the law does not apply in Scotland. That is the situation that we are trying to ensure does not arise, but it will if the hon. Gentleman permits this to go through.

11.30 am

I think that it was a slip when the hon. Gentleman referred to a purchase rather than a hire. With great respect, I think that the hon. Gentleman is mistaken. At the moment, if a consumer in Scotland hires goods, he or she is covered, just as that selfsame consumer is covered by the common law, as I understand it, this side of the border. This Private Member's Bill is an attempt to ensure, following on the English Law Commission's view of it, that it is codified clearly in a short and narrow compass. That is a desirable piece of law reform.

The consumer who hires something in Scotland at the moment is not without remedies and protection. I accept that it may be more difficult at the moment for the consumer in Scotland to discover the position in that range of activities.

I am not sure that if part II were to be introduced in Scotland, it would mean that the consumer would enjoy the same rights as he does at present. It may restrict his existing common law rights. That is why it is vital that the Scottish Law Commission should look at the matter to ensure that we do not introduce something into Scotland which, far from being an amplification or a simplification of Scottish consumers' rights, might amount to a restriction of them.

The hon. Gentleman is making a virtue out of the expediency that he has been talking about for quite some time this morning. I take the point that the law in Scotland protects such a consumer. We know that the common law gives such protection. However, the whole thrust of the proceedings in Committee—in fact, the whole thrust of the Bill—was not to make drastic changes in the law, but merely to have a codification which made it easier to identify where the consumer's interests lay. That is where the difficulty lies.

My example of the woman making a purchase in Scotland could well be true. She might just accept that she is not covered. If she goes to the Scottish Consumer Council, it will say that it does not know what the law is. She would then have to go to a lawyer and find out. By that time, my hypothetical purchaser might have lost interest in the matter or decided that she cannot afford a lawyer and would drop the whole thing. That is what we are trying to avoid.

The Minister said that the Bill might make matters worse. If that is the case, I do not see why it takes the Scottish Law Commission a couple of years to decide that. I suggested in Committee—and I am suggesting it now—that that should be looked into. The Scottish Law Commission should be asked as a matter of urgency. I do not see why that cannot be done. If the Scottish Law Commission says that it is certain that the Bill will make matters worse, the matter will end there. However, to exclude Scotland from this part of the Bill merely because the Scottish Law Commission has not reported is a dereliction of duty on the part of the Government.

I do not think that the principles are any different. I said that over and over again in Committee. The principles of Scottish and English law cannot be all that different. If a different form of words is needed in Scotland compared with England, there is no problem about that. Is this how laws are enacted and how a Bill that comes before Parliament is initiated? Do we have to wait until some learned organisation pontificates on it and sends us a report before we do anything about it?

The Scottish Consumer Council comes to its Members of Parliament, as it ought to do and does, and says, "Here is a Bill which has been introduced for England and Wales. We firmly believe that it will be of value in Scotland. Will you initiate legislation?" We say "Yes". It does not enter the council's mind—or mine—to go to the Scottish LAW Commision and ask it to report on some future legislation. That is the negation of Government authority. The Government ought to have initiated discussions when the idea of a Bill for England and Wales was first mooted.

I feel very strongly about Scotland being left out. I do not think that it has been done deliberately—I agree with the right hon. Member for Western Isles on that—but I think that it will be seen in Scotland as another instance of the way in which legislation that can be of benefit to Scotland is enacted only for England and Wales. Probably the BBC will broadcast some information about the measure, showing that it is of some limited value, and the Scots will feel that it is another instance of England legislating for itself and not for Scotland.I am not a betting man, but I would give a slight shade of odds to the proposition that Scotland will not be included in these provisions by the end of this Parliament.

I should have liked to have from the Minister a categorical undertaking, with the necessary privisos, that his Government will initiate legislation to bring Scotland into accord with England and Wales in this little matter.

May I ask the Minister to clarify whether part III, dealing with the supply of services, will apply to Scotland? I am becoming confused about which part will and which will not apply.

What I have been advancing to the House in regard to the group of amendments to which I have been speaking is that not only should part II be disapplied to Scotland, but also part III to Scotland alone. I say nothing about part III in regard to the rest of the United Kingdom.

I had assumed that that was the case, but I was not clear in my mind. I shall not get involved in the differences between Scottish and English law. I accept that this is basically a codifying measure. It emerged from earlier debate that while we were codifying English law we would not be codifying Scottish law if the Bill were made to apply to Scotland, because there are differences between the two common law systems. I am not a lawyer, and I shall not go into that labyrinth, but it seems to me in principle desirable that the law on consumer matters should be the same on both sides of the border.

My constituency is only two constituencies away from the border. Many Scots people have the sense to spend their holidays at Whitley Bay, which is a traditional holiday resort for them. It is undesirable that, when they buy something in a shop in Whitley Bay, a different law should apply from that which would apply had the purchase been made, for example, in Glasgow.

For the reasons that the Minister has given, I accept that it is not practical on this occasion, in this way, to make the law the same, but it should be the aim of the House, by some means or other, to ensure that on matters such as consumer legislation the same law applies in all parts of the United Kingdom.

If one goes just outside the town of Berwick one is in Scotland, and it is ridiculous that there should be different laws applying in shops only a mile or two apart. When I steered the Consumer Safety Bill through the House a few years ago there was no question but that it would apply on each side of the Scottish border, and rightly so.

I cannot help noticing that we spend much time in the House wrestling with what are sometimes extraordinarily complex documents and Bills to try to bring our law into harmony with that of the rest of Europe. I should have thought that it was equally important to bring the law into harmony on both sides of the Scottish border. I was intending to say that I hope that my hon. Friend the Solicitor-General for Scotland will accept that, as a long-term objective—although, I think, on reflection, that it should perhaps be described as a short-term objective—on matters of consumer law the law should be the same in all parts of the United Kingdom.

I wish to take up a point raised by the hon. Member for East Kilbride (Dr. Miller) who said that the Committee, when discussing this issue, did not divide on party lines. I have read the proceedings of the Committee this morning to refresh my memory. My hon. Friend the Solicitor-General for Scotland attended the Committee and advised that it would be unwise for these clauses to apply to Scotland. Following the debate, the Committee divided. The Hansard report shows that five Labour Members voted in favour of the amendment and four Conservative Members voted against it. It seems to me, therefore, that the Committee divided on party lines.

One has also to take account of those who did not attend. How many Conservative Members were not present?

It is not for me to tell the hon. Gentleman how the Conservative majority inadvertently failed to carry the day on that occasion. There has no doubt been discussion of this matter. I do not make this point strongly, because hon. Members have not made a strong party political issue out of the matter. What is important is getting it right. I wish only to record that the minority in the Committee followed the advice of my hon. Friend the Solicitor-General for Scotland.

It would not be correct to apply this legislation to Scotland until there has been full consideration and acceptance of the review of the situation by the Scottish Law Commission. As a lawyer, albeit not a practising one, it is wrong to legislate if in doubt. One should delay, consider and legislate following due consideration. I do not agree with the hon. Member for East Kilbride that hon. Members were showing dereliction of duty or abrogating their responsibility by not legislating in this matter.

I agree with my hon. Friend the Member for Tynemouth (Mr. Trotter) that it is most unfortunate that the work of the English and Scottish Law Commissions has not been co-ordinated in this area. It is unfortunate that it should not be possible for them to work together to produce a unified law for the whole of the United Kingdom. That is regrettable, especially when one considers the flow of legislation into the United Kingdom from the European Community. We are co-ordinating European law within our law, but we are still not able to co-ordinate the work of the English and Scottish Law Commissions and so co-ordinate consumer law as it applies to England, Wales and Scotland.

If I were still in practice and if I was advising a mail order company, I think that I should be applying my devious mind to whether it might be helpful for the company to move to Scotland, or perhaps from Scotland to England, to take advantage of the different law north and south of the border. My devious mind might be able to work out a form of contract that would apply the lex loci contractu and so enable the contract to be struck at the place of the depot of the mail order company. It might then be possible to take advantage of the disparity between the law of Scotland and of England.

Is the hon. Gentleman aware that he might destroy the benefits that could accrue from such a move by failing to take into account that rating for business premises in Princes Street is double the rating cost of the same type of premises in Oxford Street?

11.45 am

I suspect that, if I pursued that matter, I might stray beyond the immediate issue covered by the amendments. I am interested to hear what the right hon. Gentleman said. I always like to hear points expressed by Members from north of the border. That is a wise course for me to take, being married to a Scots lass.

The Law Commission report No. 95 on the law of contract makes clear, as my hon. Friend to the Solicitor-General for Scotland has pointed out, that the report is not a joint report with the Scottish Law Commission. The development of the law relating to contract for the supply of goods other than sales on hire purchase has been different in England from that in Scotland. A joint law reform exercise in this area would not have been appropriate. This point was fully recognised by the National Consumer Council in its book "Service Please" which refers to the same sort of problems. The council, on page 33, states:
"The Law Commission's draft Bill only affects the law of England and Wales. It would be desirable—as was done with the Unfair Contract Terms Act—to expand it to include a separate part to introduce the same results into the law of Scotland."
The last sentence, which is the most important, states:
"This would not seem to raise any points of principle."
The council, in the acknowledgment section of the publication, expresses gratitude to a gentleman from the department of law at Dundee university who, on behalf of the Scottish Consumer Council, dealt with the Scottish aspects of the report. The reference that it gives to the advice of one individual from one university does not carry the weight of authority of the Law Commission for England and Wales. It is important that proper weight should be given to the views of the Law Commission, which says that it does not think that unified legislation is appropriate, and to the views of the Scottish Law Commission.

I should like to remind the hon. Gentleman that the vice-chairman of the National Consumer Council is Mrs. Joan Mackintosh, a Scot and former chairman of the Scottish Consumer Council. She is well aware of the Scottish dimension of the problems that the National Consumer Council is considering.

I was about to refer to the comments made earlier by the hon. Member for Caithness and Sutherland (Mr. Maclennan). The hon. Gentleman commented to the effect—he will correct me if I quote him wrongly—that he did not understand the concern of the Scottish Law Commission about including the present legislation in Scottish Law. The hon. Gentleman was not present in the Chamber when my hon. Friend the Solicitor-General for Scotland read out a list—a long and rather worrying list—of issues that the Scottish Law Commission wishes to consider before agreeing to include this legislation in the law of Scotland. I made brief notes. They include matters such as the Scottish Law Commission's concern about the law of title and quiet possession, application of the law of sale by sample, whether trade-in of cars and goods is to be subject to the Sales of Goods Act, the application of the law of latent defects and the extent to which durability should be an applied term of contract.

I did not take notes with a view to quoting them, nor have I read the Scottish Law Commission's report. However, if these matters are of concern to the Scottish Law Commission and if it feels that it needs to give due consideration to them, it would not be right or opportune for us to include this law in the law of Scotland at this point. I am reassured by the comments of my hon. Friend the Solicitor-General for Scotland that the Government have in mind a timetable for the implementation of this law to Scotland. I shall support any amendments to exclude the law applying to Scotland at this time, but I join others in urging the Government to accept that the law should be unified as soon as possible.

I enjoyed the speech of the Solicitor-General for Scotland. It was perhaps rather long because he is not very enthusiastic about his case. He made all the points that he could make in its favour, but I got the impression that he personally was not too convinced of it.

This is not a revolutionary or an innovatory Bill. I am seeking to make a declaratory codification, and it was for that reason that I paid attention to paragraph 16 of the report. That was why, originally, the Bill did not apply to Scotland. However, the Bill applied to services, about which there was no recommendation from the Law Commission. That was approved by the House. What is more important is that the Government said—and I congratulate them on it—that they would make the change because they thought it desirable to do so, but that they would make a reference to the commission to deal with services, and in that reference it would be empowered, if necessary, to recommend strengthening the law. So there was a change. It remained desirable for the Bill to apply to Scotland if that was acceptable. In Committee we had a majority in favour of that course, but I am willing to concede that possibly the abstentions were not purposeful but accidental.

The Solicitor-General has now told us that it is not opportune to take that step because it is not declaratory, and that we should wait for the Scottish Law Commission to make its recommendation. We have no alternative but to do that. The Scottish Consumer Council says that it does not want confrontation, and certainly that is something that we should avoid.

I hope that the Government will continue consultations to see whether it is possible, when the Bill is considered in another place, to reach an agreement. If not, I think that we have obtained as adequate an assurance as we can get from the Government that the matter will be dealt with in Scotland as promptly as possible, and that if that action is taken it will result in legislation.

I was interested to hear the comments of the hon. Member for East Kilbride (Dr. Miller). His arguments were persuasive. I support what my hon. Friend the Member for Tynemouth (Mr. Trotter) said, that it seems wrong to have two separate systems, one for Scotland and one for England and Wales. This therefore seems an ideal opportunity to ensure that the law is the same in both cases, particularly as my hon. Friend the Member for Gosport (Mr. Viggers) illustrated the sort of action that could be taken to avoid the law. However, I am reassured by the fact that my hon. Friend the Solicitor-General for Scotland confirms that the Bill can be extended to Scotland shortly after the Law Commission reports.

I always suspect that the lawyers tend to use every opportunity to extend the law on every possible front for their own benefit. They have been doing that since the time of Henry VIII, and 1982 is no exception. Having referred the matter to the Law Commission, the House has no alternative but to await its comments. Otherwise, the next time the matter is referred to the Law Commission, the commission will be reluctant to consider the matter at all. It will rightly say that it is wasting its time and that it will be pointless to make a contribution. Thus, having taken the step, I believe that it should be allowed to continue.

I was heartened to hear the right hon. Member for Sunderland, North (Mr. Willey) accept that to make progress on the Bill it was necessary to accept that as a fact. There are so many good aspects of the Bill that it would be a pity to dig in on one issue and thereby lose it. I hope that my interpretation is correct, and that the right hon. Member for Sunderland, North is prepared to accept the situation.

I do not wish to prolong the debate, particularly in view of what the right hon. Member for Sunderland, North (Mr. Willey) said. However, I want to take up a number of points.

I am sorry that the hon. Member for Caithness and Sutherland (Mr. Maclennan) seemed to think that this was developing into a personal vendetta. In my view, we must clearly establish what is proposed for Scotland, who has been consulted, and what views they have expressed.

Since I intervened in the speech of the hon. Member for Caithness and Sutherland, I have been handed a letter written by one of the secretaries of the Scottish Law Commission on the meeting that he, Lord Maxton and others had with the Scottish Consumer Council. It says that
"we explored fairly fully what were thought to be the ambiguities at common law, and we were made aware of the Council's opinion that there should be legislation along the lines of Part II. The Council is therefore, fully aware of the Commission's position—that we are in a position neither to support nor to oppose the inclusion of Part II beyond making the point that legislation for Scotland at the present time may not be opportune—and has been so aware at all material times."
I hope that the hon. Gentleman will accept that that view held by the commission was communicated to the Scottish Consumer Council.

The hon. Member for Caithness and Sutherland also criticised me because I did not attempt to consider the detailed deficiencies of part II as it might apply to Scotland. I was considering whether the whole should be applied to Scotland, and for that reason I did not go into details. He, as an Englishman, will understand, for example, what the words "quiet possession" mean in English law. I am sure that the right hon. Member for Sunderland, North could deliver a learned dissertation on their meaning. This is not a term of art in Scottish law in the same way as it is in English law. Again, the term "transfer by description" is not apt for Scotland. I do not want to go into further detail. I merely ask hon. Members to accept that there are a number of aspects in part II which demonstrate their English origins and which make it difficult to leave part II as it is and apply it to Scotland.

My hon. Friends the Members for Gosport (Mr. Viggers) and for Tynemouth (Mr. Trotter) made the very proper point, which is supported on both sides of the House, that while I argue aggressively to maintain the distinctive traditions of Scottish law—again, I do not want to be chauvinistic—where it is superior I see no reason why we should seek uniformity or conformity simply to make sure that there is no difference. I quite accept that, if possible, it is desirable to have the law of the United Kingdom uniform, provided that that does not breach the principles of the two separate systems.

Am I not right in saying that if a person from Tynemouth went to Scotland and bought some goods that were unsatisfactory, and thus became involved in a law case, he would consult a solicitor in Tynemouth, who could not act for him effectively because he would not be knowledgeable on Scottish law? The solicitor in Tynemouth would have to consult another solicitor in Aberdeen, Edinburgh or whichever place was involved. Two firms of solicitors would be involved in sorting out the case for my constituent. That would involve two lots of legal costs. Surely that is something that we should not encourage.

12 noon

That is a fine, solid, unionist argument. However, as my only ally so far has been a Scottish Nationalist, the right hon. Member for Western Isles (Mr. Stewart), I am a little anxious about going down that avenue. The point of principle is that there should be uniformity as far as possible and that any legal reforms should, as far as possible, march step in step.

Paragraph 16 of report No. 95 explains why different routes were taken in this area. The development of law in Scotland had followd a different route. On that point, we are now back on track. I hope that my hon. Friends the Members for Tynemouth and for Gosport will be satisfied that both Law Commissions, in a joint exercise, are looking at buyer's remedies. That applies not only to the supply of goods, but to the sale of goods. That is an eminently worthwhile exercise for them to be engaged in, and the supply of goods in Scotland will be included.

Therefore, without in any way breaching the great traditions of the Scottish legal system, there will be an opportunity to ensure that the law reform provisions have more chance to apply throughout the United Kingdom. Of course, different sides of the border assert different priorities fo law reform. I should have thought that the Opposition would accept, in principle, that it is desirable—whichever Law Commission undertakes to make a report—for it to have the opportunity of properly investigating the matter. Once it has done so, the Government should give every consideration—policy reasons may be involved—to introducing legislation along the lines of the report.

From the outset I have sought to demonstrate that the record of successive Governments on Scottish Law Commission reports is startling. There are only two outstanding reports, and one of them cannot be acted upon at present because of our EEC commitments. That scarcely seems indicative of a Government deliberately delaying. The right hon. Member for Western Isles will recall that in the last Parliament one of his hon. Friends sought to introduce legislation on the problem of matrimonial violence in Scotland. He was unable to do so. The arguments that I am deploying are exactly the same as those deployed then. This is a complex and difficult area. As soon as the report was published by the Scottish Law Commission on domestic violence and property rights in the matrimonial home, legislation was introduced extremely swiftly. No party opposed any major part of the Bill. That is the best way of proceeding.

I am grateful to the right hon. Member for Sunderland, North for his acceptance—albeit grudging—of the fact that the provisions should not apply to Scotland. However, he said that he enjoyed what I had to say, but then paid me a backhanded compliment. He said that he thought I was less than convinced. I am utterly convinced that if we wish to retain the present first-class Scottish Law Commission under an outstanding judge and with a very good team of academic and practical lawyers, we must not ignore what it has to say about the private law of Scotland and its reform. In the long term, not only should we do the Scottish Law Commission and Scottish consumers a disservice, but we should lose the worthwhile advice that we always receive from the Commission.

Amendment agreed to.

I beg to move amendment No. 2, in page 2, line 5, at end insert—

'(f) a transfer of drugs or appliances under the National Health Service Act 1946, as amended'.

With this it will be convenient to take amendment No. 8, in clause 12, page 8, line 19, at end insert—

`(f) a transfer of drugs or appliances under the National Health Service Act 1946, as amended.'.

I am not sure whether amendment No. 8 has any meaning any more. I rather suspect that its meaning has disappeared with part II. However, I shall confine my remarks to amendment No. 2, which basically covers the same point.

Amendment No. 2 deals with bottles of medicine and pills sold by about 10,000 retail chemists, who are concerned about the Bill's possible effects on their businesses. They envisage that heavy claims could be made against corner shop chemists for the sale of defective medicines. At the back of their minds they may recall the enormous damages awarded against a well-known manufacturer a few years ago. The House will recall the tragic case of the thalidomide children. In that case, the manufacturer ultimately had to make payments to those who suffered. Chemists all over the country are worried that, as a result of the admirable efforts made by the right hon. Member for Sunderland, North (Mr. Willey), the law may be dramatically changed to their disadvantage and that, as a result, enormous sums of money could be claimed from them. I am sure that that is not the right hon. Gentleman's intention. That is a genuine fear.

The law on the sale of medicine is complex. The amendment covers National Health Service dispensing. If someone goes into a shop with a National Health Service prescription, I am not sure what contract results from the transaction. Is there a contract between the person buying the drug and the chemist, or is there a contract in which the NHS is the principal party? Of course, the NHS pays most of the cost and sometimes the whole cost. Therefore, I am not happy about the exact legal situation. However, it has been suggested that there are different legal opinions on this matter. As an accountant, I am not surprised. With any two lawyers there will be a difference of opinion. I am sure that it is possible to reach different conclusions on such a complex matter.

The official view may be that the chemists have nothing to worry about, because the law would not establish any contract between them and the person with the prescription. However, the chemists are worried about product liability. That serious and important issue hangs over the whole trade. Eventually the House will have to decide on legislation on product liability. The chemists say that high street chemists might suffer enormously as a result of product liability. I think that the English Law Commission and the Scottish Law Commission are united on this issue and have said, if and when product liability is introduced, liability for a defective drug should basically lie with the manufacturer. I understand that there is an exception in the recommendation if the drug is sold anonymously in a bottle dispensed wrongly by the chemist. If it is a proporietary drug being sold in the maker's packet or cover, the Law Commission recommends that the liability should be with the manufacturer, which is a sensible suggestion.

However, there is a fear that, if those recommendations are introduced into law, the Bill could jump the gun and bring in a liability not on the lines recommended by the two Law Commissions, so that liability rested not with the manufacturer of the drug but with the high street chemists. I can well understand that chemists, who are often small retailers, are horrified by any suggestion that a heavy liability should be imposed on them. I suppose that they could insure against it, but to insure for potentially enormous damages would entail a substantial premium.

I am grateful to my hon. Friend for allowing me to intervene now, because I hope that my small point will be taken up both by the right hon. Member for Sunderland, North (Mr. Willey) and by the Minister. If a contractual link and a link in liability is established between a customer and a chemist, the customer can follow that link through the chemist to the wholesaler and thus establish a link with a substantial company from which damages can be claimed. My hon. Friend's point affects insurance not only for the chemist but for the wholesaler who supplies him.

I am much obliged to my hon. Friend for pointing that out. It may be that wholesalers have not yet realised the potential threat.

Insurance against such risk could carry a substantial premium. That premium must be passed on to the customer, which, in the case of the National Health Service, means ultimately the taxpayer. No doubt the major drug companies already carry insurance, but an additional layer of insurance could be necessary if the fears of chemists and wholesalers are not allayed. I hope that my hon. Friend will tell the House whether those fears are justified and whether he is satisfied that the law is such that no liability will arise.

I wish to have clarification of two points. It would be illogical, unreasonable and unfair if the chemist who supplies medicine is made responsible for any damage that it may do. That is not the position in law. From a practical point of view, as in the case of thalidomide, the manufacturer of the drug should accept responsibility for the product. Perhaps the Minister will confirm whether that is the legal position.

If chemists were to be made liable, the more logical course would be for the doctor also to be liable. The chemist supplies only what the doctor has written on the prescription. The chemist is not supposed to know the reason why the doctor has prescribed the drug. That, again, would be a ridiculous position. Drugs must go through a gamut of different tests. We could not expect a medical practitioner to be responsible if something goes wrong unless he knows about the consequences and has not explained the possible dangers to the patient. All doctors tell patients about the side effects that they may experience from drugs, and the patients should let the practitioners know if any side effects occur. I wish to be sure that this legislation does not alter that position.

12.15 pm

There is no reason why chemists selling items that have nothing to do with the medical profession should be exonerated from liability, because other retailers are not so exonerated. That would be entirely fair, and the chemist would not worry unduly about it.

There is also the problem of drugs that are out of date. As the Minister knows, many bottles have tablets left in them. It is incumbent upon the chemist to destroy bottles and ensure that drugs are not used after the expiry date. However, the fears expressed by the pharmaceutical profession are unjustified. The profession is justified in being concerned, but its fears will not bear examination. I wish to have an assurance from the Minister that my two main points are as I interpret them and will not be affected either by what we are or are not legislating today.

I look forward with eager anticipation to speeches from the right hon. Member for Sunderland, North (Mr. Willey) and the Minister, because I do not know the answer to the questions raised by my hon. Friend the Member for Tynemouth (Mr. Trotter).

For some years I was a director and deputy chairman of a leading pharmaceutical wholesaler. I no longer have that interest. When I visited the United States of America I met an American business man who, when I mentioned my business interest, said "I wish to shake your hand, because you must be a very brave man". In America, consumer legislation and the ability to pursue claims against almost anyone concerned in matters that might damage consumers or patients have become so significant that firms find it almost impossible to obtain insurance to cover themselves against risk. It is worth remembering that, if a claim is made and a writ is issued, even though the legal advice given to an individual may be reassuring and the chemist, wholesaler or doctor may be reassured by a lawyer that the claim is bad, it remains an extremely worrying matter. Many business men will pay to get rid of it, even though they know themselves to be totally blameless.

A chain of people might be responsible for the prescription and sale of drugs which prove to be damaging. Initially, of course, drugs are supplied by the retail chemist on prescription by a doctor. The chemist is unlikely to be primarily liable if he prescribed and gave the goods he was instructed to supply in accordance with his medical information. Presumably the doctor is unlikely to be held liable unless it can be shown that his prescription was reckless, thoughtless or inappropriate for the ill it was meant to heal. Similarly, the wholesaler is unlikely to be found responsible if he merely purchased the goods and passed them through to the chemist in the normal way. Therefore, presumably, the responsibility will normally lie with the manufacturer, if it can be shown that it failed to carry out all proper tests.

Although that is the normal chain and the responsibility can normally be shunted up the line to the manufacturer, in my experience, the law remains unclear. I took legal advice on several occasions to ensure that I was covered against the risk of being drawn into a case. I reiterate that a business man, drawn into such a case, has a severe problem, even if the advice is that he is unlikely to be found liable.

For example, a company which is faced by an outstanding writ must mention that in its annual report and, if it be a public company, keep its shareholders informed about the progress of the case. It has been found that companies with substantial claims outstanding against them suffer since their shares stand at a discount because of the risk that they will lose money as a result of the claim. Companies in such a position always have problems when presenting themselves to the public.

I do not understand the difference between National Health Service medicine and private medicine in this case. I assume that with private medicine the position is simpler, in that the prescription is given by the doctor and sold by the chemist, whereas the NHS prescription involves a more complicated contractual position. The NHS provides medicine and the patient makes a contribution towards the cost of the item, the paperwork being handled by the chemist.

I do not understand the present contractual chain. That is a matter of concern and I hope that it will be possible to clarify it later in the debate.

The amendment is unnecessary. When somebody goes to a chemist and gets a National Health Service prescription, there is no contractual relationship between patient and chemist. Therefore, no liability arises. That is the short answer to the amendment. If there were any contractual relationship between patient and chemist, which is unlikely, the amendment would, of course, be taking away the rights that people now possess. That would be highly undesirous.

The amendment provides an opportunity to examine, however briefly, the existing liability towards members of the public on the supply of drugs. There are three possibilities and they have different legal consequences. The first possibility is on the sale of drugs—goods. If one goes into a chemist's without a prescription and buys aspirin or treatment for hay fever, or whatever, and simply pays over the counter, that constitutes a sale of goods. In such circumstances there is an absolute liability on the chemist towards the customer. At any rate, there is absolute liability for the merchantable quality of what is handed over. In a sense, the chemist may not be guaranteeing fitness for purpose.

If on the advice of a doctor one goes in to a chemist's to get a drug, the purpose of the drug has been made known to the doctor and not to the chemist. Therefore, fitness of purpose may not be provided for by the chemist. Apart from that, there is absolute liability under the Sale of Goods Act 1979 for the sale of a drug across the counter without prescription.

The hon. Gentleman referred to the purchase of aspirin and treatment for hay fever. Any hon. Member could leave the Chamber and ask for aspirin in a chemist's shop. The hon. Gentleman would be right if he were saying that the same thing would apply to a private doctor's prescription, for which payment was made by the patient to the chemist.

That is the first proposition. On private prescriptions, I am not certain, although I suspect, that the doctor is liable for professional care. Therefore, the fitness for purpose aspect of the sale of that drug is the responsibility resting with the doctor. However, responsibility for the merchantable quality of the drug—for example, if the drug turned out to be entirely different from that prescribed by the doctor—rests with the chemist. That is not altogether unfair and is analagous to the sale of goods such as aspirin.

The second possibility is that the transfer of drugs by a chemist, as part of a service, would be caught by this new legislation, which codifies the law. Even in those circumstances, if that law applies, the chemist will be liable under existing law. Under the Unfair Contract Terms Act 1977 it is impossible to contract out of liability for death or personal injury. In that sort of context, it would be impossible to escape liability under the existing law.

What is most likely is that the supply of goods under an NHS prescription will not create a contractual relationship between patient and chemist. Therefore, the patient will have no redress. The Bill and its amendments make no difference to that situation. Perhaps it ought to, and no doubt the Minister will comment on that.

I illustrate my concern by quoting a constituency case. One of my constituents was prescribed a drug called Nivaquine for a skin condition. He received that on prescription for some years. In consequence, he lost his sight. There was no liability—I am investigating the matter—on the chemist who supplied the drug, because there was no contractual relationship. My constituent could receive no redress in that direction. The doctor had no liability, because, although it was eventually known to specialists that this drug would cause blindness, it was not known to general practitioners. That was the state of knowledge at the time. Therefore, the general practitioner could not be liable. He was acting on the knowledge available to him.

In addition, there was no claim against the specialist at the hospital, because he did not know that the patient was still getting the prescription from his general practitioner.

He faced no liability. Finally, there was no liability on the manufacturer of the drug as there was no product liability relationship and clearly no negligence when the drug was first prescribed. My constituent lost his sight as a result of taking that drug, yet he has no redress against anybody. Under such circumstances there ought to be liability, whether contract or product liability, on somebody.

When there is a loss of that magnitude by an ordinary member of the public, who ought to bear the loss? Will it be the person who produced the drug and put it into circulation, or should it be the injured patient? That puts in question the whole area of product liability. I share the concern of the hon. Member for Tynemouth (Mr. Trotter), who moved the amendment, about where liability ought to fall. I have no doubt that in those circumstances—if one must choose between the liability falling on the patient, chemist, doctor or manufacturer of the drug—the prime target should be the manufacturer.

I accept the hon. Gentleman's remarks. Does he agree, in the circumstances that he outlined, that the chemist should not be responsible? One could not expect a corner-shop chemist to have the capability of analysing and researching a new drug. The chemist must surely rely on the manufacturer, who has those facilities.

12.30 pm

That is right. Instead of the patient, even if it is possible, having to tread on a set of legal stepping stones by which he proceeds against the chemist, the chemist goes against the wholesaler and the wholesaler goes against the manufacturer, there should be a direct responsibility on the manufacturer towards the ultimate consumer, which is product liability.

I hope that the Minister will say something about the current state of play on product liability, including drugs. Some advance in that direction is the best answer to the concern expressed by the hon. Member for Tynemouth, even if no liability is created under the Bill, or under any other legislation, on the chemist towards a National Health Service patient on an NHS prescription.

I thank my hon. Friend the Member for Norwood (Mr. Fraser) for putting the case so clearly to the Minister. It seems that the concern is about product liability, not about the Bill. The Pharmaceutical Society has made representations on consultation, but in this instance we are dealing with the Law Commission's report. There was thorough and full consultation on the Bill. If these transactions were covered, they would merely come within the provisions attaching to the sale of goods of merchantable quality. I shall take the Minister's advice as being authoritative. After all, the hon. Gentleman was until recently a DHSS Minister. My advice is that these transactions do not involve a contract of sale and, therefore, they do not come within the provisions that we are discussing.

My hon. Friend the Member for Tynemouth (Mr. Trotter) was correct when he said that amendment No. 8 would no longer be relevant in view of the earlier decision on part II. My hon. Friend has raised an interesting and important issue. It is right that the Pharmaceutical Society should be worried about the effect that the Bill may have on its members. Some pharmacists, including one in the constituency of the hon. Member for Berwick and East Lothian (Mr. Home Robertson), are afraid that the Bill may make them subject to a strict product liability regime in respect of any drugs that they may supply under the National Health Service scheme.

I have great respect for the opinions of the Pharmaceutical Society. It is right to be alert to any possible difficulties that might arise for its members and the public generally. However, I assure the House that there is no basis for its fears. The Bill will not alter the present position. Product liability does not arise under the Bill. That issue has been brought up by the hon. Members for East Kilbride (Dr. Miller) and Norwood (Mr. Fraser) and by my hon. Friend the Member for Gosport (Mr. Viggers). They are all concerned about issues which come entirely within product liability and do not arise under the Bill. The Bill is concerned solely with contractual rights. Product liability legislation will be needed if a directive is agreed in subsequent legislation, but it does not arise in our discussion of these matters.

I was interested in the case referred to by the hon. Member for Norwood, but again it was one of product liability. It seems that responsibility lies with the manufacturer to make it clear that in certain circumstances his products must not be used for more than a certain time.

The issues that we are discussing will not alter the present legal position for pharmacists. Perhaps I can explain the problem best by describing the types of cases that are probably worrying the Pharmaceutical Society.

First, there was the situation which led to the well known case of Appelby v. Sleep. A Mrs. McGee went to her local chemist with a prescription for medicine. She took it home and had several doses in the way prescribed. When she poured the next dose a small piece of glass came out of the bottle. Mrs. McGee complained to her local trading standards department, which prosecuted the chemist under the Food and Drugs Act. It alleged that the pharmacist had sold a drug to the National Health Service executive committee, as it then was, which was not of the quality demanded by the purchaser. The magistrates examined the case and dismissed it on the grounds that the NHS had not purchased the medicine and that there was therefore no case to answer. The trading standards officer appealed to the Divisional Court, which confirmed that there was no case to answer because the medicine had been purchased neither by the executive committee nor by Mrs. McGee, although it said that property had been transferred to Mrs. McGee.

It is astonishing that in those circumstances no one purchased the medicine, yet money changed hands for it. Is there not something that needs to be done—perhaps not under this Bill but under future legislation—so that, if further pieces of glass come out of chemists' bottles, it will be possible for some action to be taken?

I am grateful to my hon. Friend. I am illustrating the anxieties which exist, and which the Bill will not alter, which have led to the concern of the Pharmaceutical Society. Another situation that causes the society concern is when a deaf man obtains a hearing aid under the NHS. I understand that the aid would be regarded as having been loaned to him and it would remain the property of the NHS. Clearly, there is no transfer of property, but equally there is no agreement to hire. Again, the transaction would not be covered by part I.

The third situation involves a visit to the dentist. If a person has toothache and goes to the dentist for an extraction, the position is very similar to that of Mrs. McGee. The dentist has an agreement with the NHS under which he provides services to patients. The patient benefits, if that is the right word, from the agreement when the dentist extracts his tooth. I have chosen this example deliberately, because if a patient has a tooth stopped, for example, the dentist will provide him with a stopping which becomes the patient's property and the service is therefore one of work and materials. It is a complicated area given the present state of the law.

In each of these cases the patient receives medicines, a hearing aid or a service under the terms of the agreement between what is now the family practitioner committee and the professional concerned. However, as the patient is not a party to this agreement, he cannot exercise contractual rights under it. The Bill confers no new rights. The patient and the professionals associated with the NHS have nothing to fear.

I return to the case of Mrs. McGee. Her only redress would be in tort if she could show that there had been professional negligence. I hope that I have gone some way towards explaining the position under the present state of the law.

I was asked why we were discussing National Health Service and not private prescriptions. The reason is that when a private prescription is dispensed, the patient pays the pharmacist. There is a straightforward contract between the patient and the pharmacist.

I shall return to the general issues for a moment. The drug or medicine is provided to a patient by the pharmacist as a result of a contract between the National Health Service family practitioner committee and the pharmacist. The courts have held that that is not a contract of sale as it is the NHS, not the patient, that pays for the medicine. The property is transferred to the patient.

The courts have held that the contract between the family practitioner committee and the chemist is a contract for services. It is equally clearly a contract for the transfer of property in goods and is therefore subject to part I. Hon. Members will see in clause 24(3) that it is clear that a contract can be a contract both for a transfer of property in goods and for the supply of the service.

I presume that that holds good although the patient is making a substantial contribution. Am I right? The patient pays for the prescription. I presume that the Minister's reading covers that situation. It is still not a contract. What happens if the medicines that are brought are cheaper than the amount that the patient is paying? Are there two different categories of people—for example, pensioners who do not pay anything, and the person who pays?

Those are matters concerning the current law. The hon. Gentleman has raised an interesting series of points. I should be glad to look into them. I understand why he is concerned about that matter.

I come back to part I of the Bill. Unless the contrary is stated, it will imply the terms on the lines described in clauses 2 to 5 in contracts between the family practitioner committee and the individual chemist. Such implied terms already exist in the common law.

The patient is not a party to the contract between the committee and the chemist from whom he has obtained his drugs. He has no contractual rights under that contract that he can enforce in the courts. The Bill will not affect his position in any way. If the patient wishes to bring proceedings against the chemist for some defect in the medicine, he will need to rely on the law of tort. Therefore, he will need to show that the chemist has been negligent.

The hon. Member for East Kilbride asked what would happen if a pharmacist broke up a packet or bottle of medicine and dispensed it in his own way. I should be glad to look into that matter. I understand that that is covered by the present practice of the law.

I have also been asked what would happen if a pharmacist dispensed a drug in a sealed packet or bottle supplied to him by the manufacturer without breaking the seal. In such circumstances, normally there would be no way in which the pharmacist could know that there was something wrong with the medicine inside the sealed packet, yet under the Bill it would seem that he might be in breach of the implied terms—that the medicine should correspond with its description and should be of merchantable quality, fit for the purpose for which it is supplied. That is true. However, that is no more than the present position of any retailer under the Sale of Goods Act. If sued, he would have to claim against the manufacturer.

If the pharmacist wished to contract out of such a liability, it is to the family practioner committee, not to the patient, that the pharmacist would have to turn to negotiate his terms of contract.

I apologise for that complicated explanation, but it is a complicated issue. I know that the pharmacists have been concerned about how the Bill will effect them.

I congratulate the hon. Gentleman, who is a medical practitioner, on the way that he is interpreting the law.

12.45 pm

It is ironic that, following my recent change of ministerial duties, my first speech to the House in my new post should concern an NHS medical matter.

I assure the pharmacists that part I, which is based on a careful consideration of the problem by the Law Commission, does no more than restate the existing common law. It will not create greater obligations or risks for pharmacists and will not provide additional rights to patients. I am advised that there is no need to amend the Bill to meet those anxieties.

The amendment has provided the opportunity for a useful debate. There was anxiety about the matter and a number of interesting points have been raised, but I hope that my hon. Friend the Member for Tynemouth will seek to withdraw the amendment.

I congratulate my hon. Friend on steering a clear passage through the complex provisions applying to pharmaceutical retailers. I still have some doubts about whether part III, which introduces a contract for the supply of services—in words that will be statutory when the Bill is passed—affects the pharmaceutical industry. I think that it probably does not, but I should like my hon. Friend to give an undertaking to meet representatives of the pharmaceutical industry if, despite his reassurance, they are still concerned about the matter. If necessary, the issue could be discussed further in another place.

Amendment, by leave, withdrawn.

Amendment made: No. 3, in page 2, line 6 leave out `other than part II' —[Dr. Vaughan.]