Sale of Goods and Supply of Services Bill, 1978: Committee Stage (Resumed).

Thursday, 27 March 1980

Seanad Eireann Debate
Vol. 93 No. 14

First Page Previous Page Page of 6 Next Page Last Page

Debate resumed on amendment No. 11:

To delete subsection (3).

Mr. Molony: Information on David Molony  Zoom on David Molony  I had outlined most of the arguments to support my amendments to delete subsections (3), (4) and (5) of section 13. To sum up the position, we ask that the necessity for the certificate be removed altogether because it does not, as I outlined yesterday, enhance the consumer's position, and that is what we are on about in this Bill. Secondly, it puts the motor dealer in a most difficult and unjust position in regard to the discharging of what could be an almost impossible onus of proof and also in discharging an onus of proof in which he deals with a person whom he has never had a commercial transaction before. Thirdly, I mentioned the danger that we are encouraging unscrupulous dealers, in order to avoid the difficulty over the onus of proof where they fail to provide any certificate, to provide false certificates. By any standards that is something to be avoided.

The Minister, in another amendment to this section, proposes on the face of it to remove the criminal liability aspect of the section. In fact, he does not do that at all because, as long as the obligation to provide a certificate remains, a criminal liability can arise under the Consumer Information Act. Therefore, it is not fair to say that he is removing the criminal liability. I do not think the case has been made by the Minister to single out the motor trade for this treatment.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I should like to give full support to Senator Molony on this amendment. The present situation in regard to the law governing the driving of cars on our roads is a disgrace. There ought to be a proper system of ensuring that only roadworthy cars are driven on the roads. Something like what I understand prevails in the other countries of Europe, and in particular in the United [1542] Kingdom, the compulsory testing of cars after three years, should be introduced here immediately. I would be prepared to argue very strongly in this House with anybody that this is a cost we cannot afford to avoid. I know it is not the Minister's duty to deal with this matter. But it is a total pretence to bring in a system of certification. It is worse than a pretence because it is going to provide in some kind of way an excuse from doing what is so badly needed to be done. Here we would have a certificate, now without criminal consequences other than those suggested yesterday, to be issued; but when is such certificate to be issued? When a car is sold through the motor trade—on that occasion and on that occasion alone—irrespective of the age and condition of the car, once that certificate, a certificate without criminal sanction, is issued, the car may be used for ever and a day on the Irish roads. Under a proper system cars of a particular vintage require to be checked annually by competent people to ensure that they are roadworthy and safe for all those concerned—drivers, their passengers and other users of the road.

I am afraid that if we leave any element of certification in this Bill it will do damage. If it allays the public mind to any degree with regard to the situation, if it lets anybody in a Department off the hook or if it lets the Government of the day off the hook, it makes the public think that they can afford not to provide money, if money is involved to set up a proper system of ensuring that cars are roadworthy. I have here a report which was set forth in the Irish Independent of 7 December under the heading, 99.6 p.c. of cars have some defect. This was the report of a random safety check carried by the Dublin Road Safety Council. The announcement was made by the Minister of State at the Department of the Environment. I quote from the newspaper concerned:

Fuel wastage causing excessive pollution, poor brakes and faulty headlamps are too prevalent in cars on Irish roads.

[1543] An alarming 99.6 per cent of drivers are behind the wheels of cars suffering from at least one defect...

...the pollution being poured out by cars in Dublin has helped make it one of the dirtiest cities in Europe. But, apart from the pollution, cars using too much fuel are also an economic hazard and more liable to breakdown or momentary failure...

...43 per cent were using too much fuel because of incorrect tuning.

We checked on exhaust emission this year for the first time because of the high pollution level and the high price of petrol...

Of the cars examined 62 per cent had misaligned headlamps while a further 11 per cent of headlamps were defective.

The council found that poor brakes continued to be a problem. I would have thought, if anything, that these figures are likely to be biased in understating the defects. If there is any voluntary element in the making available of cars for checking on a random check of this kind, and there must be, the people who are aware of defects of one kind or another are unlikely to want their cars to be checked for fear of the consequences. Therefore, the situation may be worse than this presentation suggests. The Minister may say that he agrees, but I will say to the Minister that the section as proposed in this Bill would have had a distorting effect tradewise and damaging consequences to decent traders while not doing anything except provide an excuse for not doing anything about this problem.

It is right that the criminal element should have been taken out of this but there is no sense at all in leaving in a certification system. If someone has a car which has been sold to him with a condition that it is free from a defect which would render it dangerous to the public but if it is found to be defective, the buyer brings an action alleging that the condition is breached and in the ordinary way he proves that case. It is his business to prove that the car suffers [1544] from the defect. If we ended this section with section (2), itself revised, that would be the situation: that, I understand is the situation of anyone who will have a civil claim on any of the implied warranties which are set out in section 10.

If the seller under the proposed ministerial amendment gives a certificate, by giving the certificate he will maintain that ordinary position. But if a man buys a car without a certificate he is in a more favourable position. Forgive me, I think I have put that wrong. If the buyer gets a certificate the presumption is that the car is free from defect.

Mr. O'Toole: Information on Martin J. O'Toole  Zoom on Martin J. O'Toole  On a point of order, do I take it from the Senator that the percentage of vehicles he outlined includes new vehicles? He mentioned that about 96 per cent of the cars on our roads are defective in some way. Did he include new cars in that percentage?

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I am grateful to the Senator for coming to my assistance in a state of confusion so obvious that I do not think it can be concealed. To answer the question, the Dublin Road Safety Council simply carried out a free car check and there is no indication as to whether it included new or old cars.

If the certificate is not given there is a presumption that the defect exists at the time of delivery. Therefore, if the buyer has a certificate he will receive the benefit of the presumption that a defect did not exist and he is back in the position of an ordinary plaintiff in an action for breach of the implied conditions. It is not in his interest to keep that certificate. It is a burden on his title. It subtracts from the value of the car.

On the other hand, it is very much in the interest of the seller, if he is faced with any action, to have issued a certificate.

Minister of State at the Department of Industry, Commerce and Tourism (Mr. R. Burke): Information on Ray Burke  Zoom on Ray Burke  That is the whole object of the exercise.

[1545]Mr. Alexis Fitzgerald:  This will have the unfortunate consequence of tempting people who ought not to, to issue certificates and it will tempt people who ought not to, to lose certificates. It will place a burden on the seller to maintain systems of proof of the existence of certificates, without this Bill having any element whatever in ensuring that they represent some solid type of examination worked on by or on behalf of the seller. What is the position of a seller if, for example, he loses all record of a certificate which he issued? The employee who issued it may have left that employment. The seller would be faced with a claim way down along a line, a chain of buyers, and at all stages in that route it is going to be in the interest of the owners of the car, after the original seller, not to have that certificate. If we are breaching that privacy of contract it is dangerous to let the matter of proof become affected by the introduction of an artificial rule of this kind. Changing the ordinary way in which these matters which are in themselves meant to be difficult to prove or check will be affected. What would be the action here would be that the defect exists at the time of delivery and the car owner will have the difficult business of proving that the defect did not exist at the time of delivery. I fully support Senator Molony's first amendment.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Senator FitzGerald said this is a comparatively useless provision—and totally useless depending on how far he pushed it—because cars will not be maintained properly and there is no system of ensuring that they are tested regularly by the Department of the Environment or some other Department. I agree that it is very necessary and desirable that there should be a system of ensuring that cars on the road are kept in good condition and are tested from time to time. However, I cannot see that merely because that is not done at present we should not have a provision of this kind in this Bill. In other words, two wrongs do not make a right. Just because one thing is not done [1546] properly is no excuse for not doing something else properly.

The ideal situation would be that cars would be sold free from any defects and, in particular, free from any defect that would endanger people's lives. In this Bill we should do our utmost to ensure that cars are sold free from any such defect. At least we will be making a good start on ensuring that cars will be free from these defects. If the other provision comes into operation in due course, then we will have gone as far as it is possible to go from a statutory point of view in ensuring that cars are free from defect.

Merely because Senator FitzGerald is dissatisfied with the provision of maintaining cars I cannot see that that is a good reason for not having the provisions that are in the Bill.

The purpose of the amendment put down by the Minister seems to be to ensure that the certificate will be given and if the seller does not give it, he is in a much weaker position. The purchaser has only to prove that the defect exists. He does not have to prove it existed at the time he bought the car. It certainly puts him in a much stronger position. The result of this will be that the seller of a car will give the certificate in question and will ensure that he has a copy of it signed by the purchaser. He will have some system of ensuring that, if the occasion arises, he will be able to prove he did give the certificate. His obligation then is somewhat less than if he is unable to prove he gave a certificate which places him in a very weak position. The purpose of the amendment is not to put the seller in that kind of situation but to ensure that he will give the certificate so that he will not be put in that situation.

Mr. Molony: Information on David Molony  Zoom on David Molony  I should like to comment on some of the remarks made by Senator Ryan. I accept that two wrongs do not make a right. I wonder whether he chose his analogy carefully because, in effect, that is what we are doing. That we do not have a system operated by the Department of the Environment is a wrong in itself. The fact that we are trying to right a wrong by creating another [1547] wrong is just the point. I would take what he says in that way. Two wrongs do not make a right. This is not the way to deal with the problem of roadworthiness of our cars for several reasons.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  It is a way to make a start.

Mr. Molony: Information on David Molony  Zoom on David Molony  It is, but first of all it is a very unreliable way to make a start. Secondly, it is unjust. This is the major thrust of our response. Thirdly, it leave the way open for unscrupulous motor dealers and car owners who want to abuse the system. For those reasons, the Minister's amendment is not at all acceptable.

Senator Ryan referred to the manner in which a motor dealer might prove that a certificate was given, but he did not go into it in any great detail. I wonder how that is to be done. It is likely that in many of these cases the person who brings the legal proceedings will not be the person who received a certificate in the first instance at all. What is the position where a secondhand car owner or the person twice removed from the motor dealer alleges that he has a car and no certificate was given? The presumption even for that is in his favour. What is the motor dealer to do? Go back to his books and find whether a certificate was issued or not? What is he to do? Produce a copy of a certificate signed by somebody else? Surely no court could accept that as a proof of anything unless the person who had signed it was in court to give evidence. He has nothing to do with the arrangement at all.

The motor dealer is left in an impossible position unless some other provision is to be made with regard to these proofs. How he is to prove the certificate was supplied? Quite apart from having to prove the non-existence of a defect he must prove that he gave a certificate to somebody who is not suing him at all. Perhaps he will not have an idea of the whereabouts of that person. If he has no idea of the whereabouts of that person under the legislation as drafted at present, [1548] nothing comes to his aid. There is a simple presumption against him and that is it. Frankly I cannot see that that is just in any sense.

I accept that the purpose of the Minister's amendment is to ensure that the certificate will be provided. The point Senator FitzGerald was making is that it will be to a buyer's advantage to say that no certificate existed. The seller will want to show that a certificate, even a false certificate, was issued. A false certificate would be the best thing for a motor dealer to give if he is to acquit himself well under this difficult section. The buyer is far better off in saying there was never a certificate in existence. Then he does not have to prove that the defect in the car existed at the time. The presumption is in his favour. He goes into court and he does not even have to say there was never a certificate. He simply alleges, in his pleadings presumably, that there was not a certificate. The onus of proof is put on the other party. It is ludicrous and unfair. It is no way to try to deal with a very serious problem and I think it is a sham.

Mr. Jago: Information on Valentine Jago  Zoom on Valentine Jago  I can see the point Senator FitzGerald is making. He is assuming that the certificate would say that the car is in good working order. That may not be the case. I should like the Minister to comment on what I am saying. The Bill says that the Minister may make an order that a certificate has to be given and shall be given by the dealer if the Minister makes the order. It does not say what that certificate might be? That certificate could be the proof that the car was examined and inspected before sale, which would be an advantage to the person buying the car. In other words, the dealer gets in a secondhand car without even looking at it and sells it to somebody else. The Bill, as it stands at the moment, does not tell us what that certificate will be.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I have considered thoroughly all the arguments which have been made on this matter, both by Members of this House and by representatives outside the House of the various [1549] interests in the trade. I have given much thought to the effect which the removal of the offence element will have both on the motor trade and on the motorist in whose interest the section was drafted in the first place. From the point of view of the motor trade, the important change which I propose here is that failure to issue a certificate will not now be a criminal offence. This was the fundamental argument made in the Dáil and in the Seanad and in all the representations which I received from the representatives of the motor industry. They were particularly concerned about this element of the creation of an offence with regard to the certificate and, following the arguments that were put forward, I have tabled the amendment that is before the Seanad today.

Instead of the criminal offence, if the certificate is not proved to have been given in an action brought under subsection (2), I now propose that it will be the responsibility of the motor dealer to prove that the dangerous defect involved did not, in fact, exist at the time of delivery. From the motorist's point of view, the retention of the certificate requirement is important in that it would focus specifically on those aspects of a motor vehicle which could, if defective, prove dangerous. The requirement to issue a certificate was a specific recommendation of the NCAC who, I should emphasise, saw it more as a consumer protection measure than a road safety one. The amendment which I propose increases this protection.

The certificate is not designed as a road safety measure or as a substitute for an MOT test on the lines of the UK system. The certificate is a consumer protection measure as it requires the dealer as a party to the contract of sale to give the certificate. A certificate granted by an independent third party would afford no protection to the motorist in pursuance of a breach of contract claim. I agree it is desirable that an MOT test should be introduced in the near future. I accept the point made by the Senators. I hope Senators also accept the point that this is not directly my responsibility.

[1550] There is a fundamental misunderstanding about this contract situation and I will try to clear it up. There is no contract between the seller and a second buyer. The only third-party involved is one who is using the car—say a son, who is using the car with the father's permission. This is using it with the owner's consent. A garage man sells a car to Mr. X. Mr. X sells to Mr. Y. The certificate is not carried on to Mr. Y. A new certificate has to be issued when X sells the car to Y through a garage. It is important to clarify that element because it is coming up again and again in the arguments made by Senators. It is not intended that this certificate will be an ongoing situation. It is part of a contract between a buyer and a seller and will not go on to the third person who, in turn, buys from the first buyer. This is important. The only third person involved is one who is using the car with the owner's consent.

Mr. Molony: Information on David Molony  Zoom on David Molony  I want to clarify that. In relation to the certificate itself, I would be very pleased if the Minister accepted my amendment, but we will deal with that later.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I cannot.

Mr. Molony: Information on David Molony  Zoom on David Molony  I do not believe that the proposed amendment to section 13 as it stands provides that a secondhand car owner is not entitled to use this certificate against the motor dealer.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The Senator is talking about the second buyer.

Mr. Molony: Information on David Molony  Zoom on David Molony  Any buyer. As I read the section and the ministerial amendment, I believe that a person who has bought a car from the first buyer, from the person who received the certificate, has the benefit of the certificate. In view of the twisted presumptions in law, I would ask the Minister to discharge the onus of proof and show us how it is not the case.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  A lot of what I said falls to the ground as nonsense if the Minister is correct.

[1551]Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The contract is between a buyer and seller.

Mr. Molony: Information on David Molony  Zoom on David Molony  We are talking about a certificate not a contract.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Any subsequent owner is the lawful user of the motor vehicle.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Even if the Minister was right, which I do not admit, if the second owner lawfully permitted somebody to use the car, his son for example, would his son not have the benefit of what is proposed?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The whole basis of this legislation is consumer protection, to protect the buyer in a transaction. It is not the second buyer. A second certificate would have to be issued.

Mr. Molony: Information on David Molony  Zoom on David Molony  The Minister, I presume, is replying on section——

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  If a motor trader sells a car to Mr. X, if Mr. X's son uses the car with his consent, that is covered. If Mr. X in turn sells it to Mr. Y, that is a different contract. You are dealing with a different situation altogether.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  You are dealing with a different situation, but the Minister brings in that different situation into the liability proposed by the section, because it refers to a person lawfully using the motor vehicle.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The situation will be that the liability will not apply to the first seller. It will apply to the second seller.

Mr. Molony: Information on David Molony  Zoom on David Molony  Our difficulty is this. Subsection (6) relates to subsection (2) which deals with implied conditions. Let us look at the Minister's amendment to subsection (4). Where in that amendment does he limit the use of the certificate to the first recipient of the certificate?

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Let us put it beyond doubt because it has created this [1552] doubt in many people's minds. In section 19 (1) the Minister put in the words:

In this subsection, “buyer” includes all persons who acquire title to the goods within the duration of the guarantee.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It is not necessary to qualify it because in a second sale there would be a new contract.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  There are many stupid Senators and there may be stupid judges.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I will not comment on that.

Mr. Molony: Information on David Molony  Zoom on David Molony  Can we not say that the certificate expires, or something like that, when the recipient of the certificate disposes of the car? Would that not clarify the position?

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  It is hard luck on the son who bought the car from his father if he has not the same right as he would have if he was merely using it with his father's permission.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The Senator is talking about the father selling to the son. That is not with his consent. I am talking about a situation where the son is using it with the father's consent, and there is no sale.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  This could be dealt with on Report Stage. It needs clarification.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  If the Senator feels it needs clarification I can look at it between now and Report Stage. That is the intention.

Séamus de Brún: Information on Seamus De Brun  Zoom on Seamus De Brun  I can see one reason for that intention. The Minister said there is only one sale in question. I can see a reason for that. If Mr. X who bought the car originally has an accident with that car and then sells it to Mr. Y, the original seller who sold it to Mr. X could not be held responsible for a car that was made defective as a result of the accident which the second buyer has with the car.

[1553]Mr. Molony: Information on David Molony  Zoom on David Molony  I want to ask about the effectiveness of the Minister's amendment. I presume we are taking all the amendments together. Under subsection (2) where the condition is implied, is it possible for a motor dealer to get somebody to sign an acknowledgement that he is contracting out of his rights? Paragraphs (a), (b) and (c) of subsection (2) provide the exceptions to the application of the implied condition. The first exception that is agreed between the seller and the buyer is that the vehicle is not intended for use in the condition in which it is to be delivered to the buyer under the contract. There is no provision that it is not to be used. The provision is that it is agreed between the purchaser and the seller that it is not to be used. A very simple device for avoiding any implied condition would be for a motor dealer to require somebody to sign an acknowledgement. If I were advising a motor dealer, that is the way I would have to advise him, given the difficulty he would have in proving the passing on of the certificate. He would be far better off if he had a note saying it was agreed between them that the vehicle was not intended for use in the condition it was delivered to the buyer. I should like to ask the Minister whether it is possible to avoid the implied condition altogether.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Surely that is covered in paragraph (c), which says that the agreement referred to in paragraph (a) is, in all the circumstances, fair and reasonable.

Mr. Molony: Information on David Molony  Zoom on David Molony  A secondhand car may be sold and some defect may arise a year later. Where there is an agreement signed by somebody that it was not intended for use in the condition it was in, what is fair and reasonable about that? Somebody may say: “There is something wrong with the engine of the car. I have a friend who is a mechanic and he will fix it for me.” If a motor dealer gives that as a reason, it is perfectly fair and reasonable. It will save an awful lot of problems.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  The circumstances envisaged in paragraph (a) will occur quite often.

[1554]Mr. Molony: Information on David Molony  Zoom on David Molony  I would imagine so.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Some provision has to be made and consequently it seems to me that this is very well dealt with. In that situation a statement that the buyer does not intend to use it is made and signed by both parties. If there is any doubt about that later, or if a conflict arises or proceedings arise, then it is for the court to decide whether in all the circumstances it was fair and reasonable to make this provision. You have to provide for that kind of situation and this seems to be a very good way of doing it.

Mr. Molony: Information on David Molony  Zoom on David Molony  I must accept, of course, given the section as we have it, that we have to provide for that type of situation. I am merely drawing attention to the problem being created by the section. I accept what Senator Ryan said. It will arise regularly. It is perfectly fair and reasonable for somebody to buy a car from a motor dealer and say: “I have a friend who is a mechanic and he will fix it for me.” The court would have to toss a coin to decide what to do. The problem is created more or less because of the general approach being taken to section 13.

I might also make the point which we made on Second Stage, but which we have not mentioned, in relation to section 13. There is a very simple way of avoiding this. It happens already in the motor trade, and it will happen more and more and particularly in relation to secondhand cars, that motor dealers advertise in the newspapers under private numbers. In future they will avoid coming within the section because they will not appear to be motor dealers. There is nothing at all in the section that tries to deal with that. It is a problem which prevails at the moment. An unscrupulous motor dealer, to avoid breaches of this section, will merely have to place an advertisement in the Evening Herald:“Such and such a car for sale, Dial such and such a number.” The purchaser does not know he is a motor dealer and the section is avoided. The most unroadworthy car can hit the road.

[1555]Mrs. Cassidy: Information on Eileen Cassidy  Zoom on Eileen Cassidy  Surely the purpose of paragraph (a) is very clear. It is to cover a situation where a car is not bought to be driven, but for spare parts. It is to be towed home. It is never driven.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I do not think this will be the big problem Senator Molony anticipates. I do not think it will be more prevalent. If somebody is dealing in that way he will definitely be taken as dealing as a seller.

Mr. Molony: Information on David Molony  Zoom on David Molony  The Minister said he has no reason to believe that it will not be more prevalent. It is prevalent at the moment and under this section I would have thought it is likely to become a good deal more prevalent. Why does the Minister feel it will not?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I do not accept that. Under my amendment I have met the fears of a large number of people who made representations to me and, at the same time, I have protected the interest of the consumer, which is the whole object of this Bill. My amendment is a fair compromise to meet both sides of the case that has been put to me. At this stage I feel I should stand firmly by the amendment.

Mr. Molony: Information on David Molony  Zoom on David Molony  Would the Minister answer the question I asked about why he feels there is no reason to believe the practice of selling cars in an underhand way will not become more prevalent as a result of this section?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  They will be dealers——

Mr. Molony: Information on David Molony  Zoom on David Molony  Perhaps the Minister is not familiar with the problem, but if he picks up an evening paper he will see how extensive the problem is. It is a problem that requires to be dealt with quite independently of this. I am sure the Minister is concerned about the consumer's position and is familiar with the problem.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I am familiar with it.

[1556]Mr. Molony: Information on David Molony  Zoom on David Molony  Then it is reasonable to presume that when you put further restrictions or further onerous and unreasonable responsibilities on motor dealers it is likely that that problem will develop rather than retract in any way.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I do not see that I am putting unfair or unreasonable responsibilities on motor traders. The purpose of this Bill is to protect the interest of the consumer without being unfair to the seller. I feel that what my amendment involves here, and the section as it stands, will mean that the interests of the consumer will be protected. I offer no apology to any Senator for trying to protect the interests of the consumer as fully as possible. That is the purpose of my amendment and that is why I introduced it.

Mr. Molony: Information on David Molony  Zoom on David Molony  We are all trying to protect the interests of the consumer. There is no need for the Minister to suggest that anybody is looking for an apology. We are talking about business efficacy as well as providing for the interests of the consumer. We are talking about the costs. The costs of motoring are already bad enough in this country as is the cost of insurance. These will be affected by the burden that is being imposed on motor dealers. In fact, there are two ways of looking at the interests of the consumer and I can assure the Minister that he is not the sole standard bearer in this particular respect. I would come back to the point that I have put to the Minister in relation to the people who sell cars privately when in fact they are motor dealers. Will he acknowledge that the problem is likely to be exacerbated rather than helped in any way by this section? I would ask him whether he has any plans, in view of his adherence to his proposals, to do something about it.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I have said already I do not agree that the amendment will in any way further exacerbate the situation. There will always be private deals undertaken but it is totally impossible to define a dealer; it will depend on the facts of each individual case. Each individual [1557] case will have to be examined. Obviously I do not want to see these backstreet traders. I definitely do not want to see this extended. There is nothing in this section or amendment that will in any way exacerbate the situation.

Mr. Molony: Information on David Molony  Zoom on David Molony  The Minister has no plans to deal with the problem which exists at the moment in relation to the practice of selling cars apparently privately? He has no plans to deal with that?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Has the Senator any suggestions that he would like to make himself?

Mr. Molony: Information on David Molony  Zoom on David Molony  If this is an opportunity to redraft the section we might have a go at it. I think it is inevitable that the problem will get worse.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I do not accept it. I think this will improve the situation, rather than the reverse.

An Leas-Chathaoirleach:  Is amendment No. 11 withdrawn?

Mr. Molony: Information on David Molony  Zoom on David Molony  Given that the Minister has promised to review the section particularly in relation to the apparent breaches——

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  No. I said I would have a look at the situation. I feel at this stage that I must proceed with my own amendment.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  The Minister is concerned with the consumer. We think it is necessary to advise the consumer to lose his certificate as quickly as he can.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I do not think that is a reasonable thing. It would not be of advantage to him. It will be registered on both sides and the garage owner will have a copy of the certificate.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  It is to the disadvantage of the consumer. He is in a [1558] worse position that he would be if there was no provision for this certificate. If something goes wrong with the car he will be in a worse position if he has a certificate than if he had not got one.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That is not correct.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I understand it to be correct.

Mr. Molony: Information on David Molony  Zoom on David Molony  He has to discharge no onus of proof if he did not get a certificate so he is in a very much better off position. The big difficulty anybody has in proving his case is removed from him. It is an excellent position to be in. The Minister has said that both sides would register it but there is no provision for registration. Did the Minister consider in order to remove the difficulty of the onus of proof a system of registration that might help?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  When I said register I did not mean a formal registration, I meant copies would be held and maintained by both garage and owner.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  The Minister has power under subsection (3) to make regulations and to prescribe the form of this certificate, so it may be that that will provide a way of ensuring that the seller has a way of proving that he gave the certificate. I think it might be very worthwhile having that as part of the regulations.

Mr. Molony: Information on David Molony  Zoom on David Molony  There is one point that I forgot to mention in all of this. It fuels my fears, worries and suspicions about the section, because this is the only place in the Act where the word “regulations” is used as opposed to “order”. The Bill is full of delegated legislation but in this one particular respect “regulations” is used in respect of the delegated legislation instead of “order”. The very subtle distinction is that orders must come before this House while regulations do not. That is something I was informed by the Minister for the Gaeltacht who attended here last week. I was surprised at that. I must say that the most controversial [1559] sections in the Bill have regulations that can be made by the Minister without reference to the Houses and in almost every other section of the Bill there is provision for orders.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  It is not true that every order has to come before the House.

Mr. Molony: Information on David Molony  Zoom on David Molony  Under this legislation it is the case. There is a provision stating that “... a draft to every Order proposed to be made ... shall be laid before each House of the Oireachtas, and the Order shall not be made until a resolution approving the draft has been passed by each such House”. In the circumstances, and in view of the Minister's approach I would ask him to agree to amending “regulation” to read “order”.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The idea of the regulation is that this is something that will be discussed with the motor trade in redrafting the form of the certificate and so on. It is not something for the Houses of the Oireachtas as such. It is something for the Department to draft working together with the Department of the Environment. This brings me to the point raised by Senator Jago regarding the form of the certificate. This is something that will have to be discussed with the motor trade itself with all of these.

Amendment, by leave, withdrawn.

Government amendment No. 12:

In page 9, to delete subsection (4), lines 41 to 47, and substitute the following:

“(4) Where an action is brought for breach of the implied condition referred to in subsection (2) by reason of a specific defect in a motor vehicle and a certificate complying with the requirements of this section is not proved to have been given, it shall be presumed unless the contrary is proved that the proven defect existed at the time of delivery.”

[1560]Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  This amendment has caused me some confusion. Would it be possible to see whether all the double negatives could be changed in any way? It is frightfully difficult stuff to take in and retain. Subject to that and the points I made generally with regard to the certificate, I accept the amendment.

Amendment agreed to.

Amendments Nos. 13 and 14 not moved.

Government amendment No. 15:

In page 9, between lines 56 and 57, to insert a new subsection as follows:

“(7) The Statute of Limitations, 1957, is hereby amended—

(I) by the insertion in section 11 (2) of the following paragraph—

`(d) An action for damages under section 13 (6) of the Sale of Goods and Supply of Services Act, 1980, shall not be brought after the expiration of two years from the date on which the cause of action accrued.';

(II) by the insertion in section 49 of the following subsection—

`(5) In the case of an action claiming damages under section 13 (6) of the Sale of Goods and Supply of Services Act, 1980, subsection (1) of this section shall have effect as if for the words “six years” there were substituted the words “two years”.' ”

Amendment agreed to.

Question proposed: “That section 13, as amended, stand part of the Bill.”

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I think the idea behind subsection (2) is excellent but I would prefer if there were some way possible to break the subsection into two subsections so that we might have a consequential amendment elsewhere. I [1561] think it would make for clarification of the section if subsection (2) ended with the word “vehicle” on line 22, page 9. Then the next part might read “subsection (2) shall not apply”. Having made that drafting suggestion I would suggest that subsection (2) should only be excluded from application where the complete sale of the vehicle is by agreement in writing so that there is no argument afterwards about the deal. A point against the seller and very much in aid of the consumer is that there is a piece of paper in existence that takes the seller out of the implied condition in subsection (2). Then there may be other matters agreed between them as to what has to be done. That is part of an overall bargain that lies outside of the transaction. It should only apply where the whole agreement between them is a written agreement.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I would have no objection to putting it in as a written agreement. I might do that on Report Stage.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Can the Minister tell us if it is intended that the sale of surplus Government motor vehicles will come within subsections (2) and (3)?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Question put and agreed to.

Question proposed: “That section 14 stand part of the Bill.”

Dr. Whitaker: Information on Thomas K Whitaker  Zoom on Thomas K Whitaker  In my intervention on Second Stage, I explained why I was concerned about the unqualified, open-ended liability which this section attaches to one particular kind of financial transaction. The Minister touched briefly on this in his reply on Second Stage but he did not push his conclusion beyond saying that it is fair that the finance house should bear a certain amount of liability. That is precisely the point. I would accept that it would be socially justifiable that a certain amount of financial [1562] liability should attach to finance houses in this particular kind of case but not a liability shared with the seller which is unlimited in time and amount.

For clarification, perhaps I may briefly recall what I said on Second Stage. The issue is really whether a finance house should be liable in particular transactions while the provider of finance is not liable at all in other cases. I instanced three kinds of transaction. The first is I pay for a car by drawing down my overdraft. In that case no liability attaches to the bank in connection with the transaction and nobody is suggesting it should. The second case is where I borrow from a finance house myself on a hire purchase or credit sale contract and I pay the supplier with the proceeds. Again in that case no liability attaches to the finance house and I have not heard any suggestion that it should. Now we come to the third case which is the one in point here. The finance house acquires title temporarily to a car because it pays the supplier direct and then collects the money from me on a hire purchase or credit sale agreement. It is in that case, and in that case only, that this section makes the finance house jointly and severally liable with the supplier for the quality of the car—for its road-worthiness.

I said on Second Stage I did not follow the logic of this. I can see that the legal position is different. I accept that abuses can arise if finance houses are too liberal in financing sales or enabling sellers to push their wares and, therefore, on social grounds there is a case for imposing some liability on them. I suggested on Second Stage that, on the social front, surely the Central Bank can do something to make sure that finance houses do not extend credit too liberally for any undesirable purpose or, indeed, for any particular purpose.

I now again ask the Minister whether there are really adequate social grounds for differentiating as much as this section does between one form of financial transaction and another. I suggest again that surely the supplier should bear the principal liability and the finance house be liable only in a secondary and limited [1563] way, not perhaps exceeding its original financial part in the transaction.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I would argue in support of Senator Whitaker generally that the finance house should at least have a right of indemnification from the supplier. I do not think it is just that it should be liable for misrepresentations made by the seller or for the seller's breach. He is the man in the market place and knows all about it and the finance house ought to be able to recover from him while being as liable as the seller to the consumer. Perhaps Senator Whitaker would not go as far as that with me but that part I am content to have. Again, I would think that there is a distinction. There is no good going around as legislators trying to protect people who are able to spend large sums of money on consumer objects of one kind or another. I think there should be an overall monetary limit to the sort of sums where this section applies. The UK have a monetary limit which was fixed six years ago at £10,000; maybe we could double that. If somebody is getting finance for the acquisition of a yacht or something, I do not see why there should be an involvement in this way of the finance house. A more important point is to get the indemnification, the right to recover from the supplier.

Mr. Molony: Information on David Molony  Zoom on David Molony  I agree with everything that has been said in relation to indemnification. It is most unjust that a finance house should be left with liability when the supplier who was perhaps responsible for the unhappy differences which arose in the arrangement should be left unscathed, so to speak, by proceedings afterwards.

On the point that Senator Whitaker mentioned, I frankly do not see that the Central Bank are the appropriate party to try to deal with the real problem that has been in existence for some years now. Many people would not ordinarily purchase a television set, a motor bicycle or whatever if they could not afford it but now finance houses are in a position to have arrangements with the suppliers [1564] of these goods so that they can advertise their wares in their windows at, say, £2 per week or monthly instalments instead of the total cost. I think finance houses have a very definite responsibility in this field. The reality is that they are operating in a lucrative financial market. They are encouraging many transactions that would not otherwise take place at all. For that reason they should be every bit as liable as the seller of the goods to be responsible to some extent if something goes wrong with the goods afterwards.

Because of the peculiar three-cornered situation we have when the hire purchase companies actually become owners of goods, tremendous legal problems are presented to us sometimes where the buyer, in reality the person who uses the goods, has a problem. He frequently must sue the hire purchase company. We need to look at our consumer credit legislation and bring it far closer to reality. The reality there is that some of these finance houses induce transactions that would not otherwise take place and they have a responsibility. In fact I would go a little further than the provision goes and question whethere it is proper that it should be limited only to consumer transactions. For example, I know of young people who are in the agricultural contracting business and they have too many machines. The reason they have too many machines is that they can obtain them through the finance houses. Perhaps they should be more wise and sensible but there are many young people who involve themselves in a new business and they take on too much. Finance houses are all the time too willing to lash out funds to them. If something goes wrong with second-hand equipment the finance house has no liability; the person has no equipment but he must continue to pay the instalments and he is thrown into a situation where his new business runs into bankruptcy problems. I am not talking about the person who is purchasing a yacht—that is just one example. There are other examples of items necessary for a business that would not come within the definition as set out in the Bill. [1565] On Second Stage I pointed out that the jockey who buys a saddle for his racehorse is covered but if he intends to use it on his hunting horse it is not covered. The consumer definition is fine, It is a good idea in the Bill generally but there are sections which have to be looked at again.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The section imposes on a finance house joint and several liability for breach of contract and for any misrepresentations made by the seller. The type of transaction covered by this section is not a hire purchase agreement but nevertheless the section is a necessary supplement to Part III of the Bill which deals with hire purchase.

The buyer in the situation covered by this section is not a hirer and the property and the goods pass immediately to him on purchase. The problem is, however, that the buyer may be left without recourse. When the seller has been paid in full directly by the finance house he would rely on the defence that he had not sold the goods directly to the buyer and, therefore, he was not liable to action for breach of implied warranties or conditions. The finance house, on the other hand, could resort to the argument that they were responsible for the provision of finances only, which would constitute their primary business as distinct from trading in goods. Therefore, they could argue that they did not sell the goods, the overall result being that the buyer is apparently stripped of any source of redress should the goods later prove defective. It can be said of this type of transaction that it compares with a hire purchase agreement in that it hides the true function of the finance company. Although they call themselves finance houses, the way that they have chosen to so business means that they become dealers in goods. Moreover, the finance houses would press the buyer for the repayment of the money paid to the seller, that is, the price of the article bought by the buyer.

The objective of this section is to remove any doubt that may militate [1566] against an effective redress for a buyer where a pre-existing arrangement operates as between a seller and a finance house. Both parties are hereby deemed to be a party to the sale and both shall be liable to the buyer for any breach of the contract of sale or for any misrepresentation made by the seller. The finance house would in any court action by the buyer be jointly and severally liable. Even if the buyer took his action only against the finance house, the latter could enjoin the seller in the action. Furthermore, if the finance house only provided part of the purchase price, it could, under a continuing agreement with the seller indemnify itself against any loss over and above its financial input in any particular case, the point made by Senator FitzGerald. There is nothing in the Bill to restrict the finance house from indemnifying itself.

Dr. Whitaker: Information on Thomas K Whitaker  Zoom on Thomas K Whitaker  I thank the Minister for that explanation but it does not effectively answer the difficulty that I expressed which was not against the finance house having a liability because of the particular nature of the transaction. As the Minister said this means that legally the finance house becomes a dealer in relation to goods in this particular kind of transaction. What still worries me is that the liability that the finance house assumes is an unlimited one. It is joint and several with the actual supplier and if at any time in the future a misrepresentation about the quality of the goods should be proved and the original supplier is not then available to answer or to give redress for that, then the whole liability, not only for the original financial contribution but for any damages arising attaches to the finance house. What I was questioning was not the social justification for imposing some liability on finance houses in this particular kind of transaction where the purchase might not take place without their intervention—where they lend themselves to the pushing of wares—but whether it is altogether fair and reasonable that that liability should be of a completely unlimited character in time and amount. [1567] I am not quite sure I understand the remark the Minister made about indemnification.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  With regard to indemnification, if the finance house only provided part of the purchase price it could under a continuing agreement with the seller indemnify itself against any loss over and above its financial input in any particular case. The thing to remember is that what we are doing here is protecting the interests of the consumer rather than the interests of the finance house. It is up to the finance house as such to protect and indemnify itself. What we are doing here is trying to protect the interests of the consumer.

Business suspended at 2 p.m. and resumed at 3.30 p.m.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Before we adjourned, I was about to ask the Minister a question with regard to section 13. In the case of a person who purchases a motor vehicle through hire purchase and somebody lawfully using that vehicle wants to invoke subsection (6) of section 13, whom does he sue?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This section is not dealing with hire purchase. It is a different type of arrangement.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Would the matter not arise on this section anyway?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It arises later on on hire purchase.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  The ownership stays with the buyer, not the finance company?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  The finance company do not acquire ownership at all.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  No.

Mr. Molony: Information on David Molony  Zoom on David Molony  I know it is not the intention that banks as opposed to finance houses could become liable under the section, but I know some concern has been expressed that, even with the [1568] amendment that was made in the Dáil, an ordinary bank, with regard to a normal commercial transaction over the passage of a cheque, could become liable in certain circumstances. There is the position that has been described of the client of a bank operating an overdrawn account. There is there an implied agreement to repay the money.

I am concerned that there are circumstances in which an ordinary bank may become liable under this section. I am not absolutely certain that they would become liable, but I can sympathise with a view that has been expressed that they might become liable given the circumstances where a bank customer is operating an overdrawn account and he draws a cheque to pay for a particular item. There is in those circumstances at least an implied undertaking on the part of the bank customer to repay the amount of the cheque he has drawn.

Take the situation of someone who has an overdraft and draws, let us say, £1,000 to buy an item. There is an implied undertaking, if that person is operating on an overdraft, that he or she will repay that £1,000 to the bank. The bank, effectively, paid the person who supplied the goods, it is fair to say as well. We have an institution, a bank, who pay the seller and we have at least an implied undertaking, on the part of the drawer of the cheque, that that person will repay, in the example I gave, the £1,000 to the bank. In those circumstances it seems to me to be possible on a construction of section 14 that the bank could become liable.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Would that not apply if the bank only paid the seller directly, if they made a draft out to the seller? If they merely agree with the purchaser to make an overdraft available and then he pays out his cheque——

Mr. Molony: Information on David Molony  Zoom on David Molony  With respect, I think it is conceivable that the bank could become liable. I am merely trying to be of assistance here. I know that it is not at all the intention that a bank would become liable. Where there is an overdrawn [1569] account and a person draws a cheque it is the bank who actually pay the consideration to the seller of goods. I know that is not the way we ordinarily interpret it.

On a strict construction of section 14, however, the constituents are that in relation to the sale an agreement is entered into by the buyer with another person who is acting in the course of a business. The agreement there is that the drawer of the cheque at least implies agreement to repay that money to the bank. There must be at least an implied agreement in circumstances like that. The section says: “...for the repayment to the institution of money paid by the finance house to the seller in respect of the price of the goods, the finance house shall be deemed to be a party to the sale and the finance house and seller shall jointly and separately....” I believe that in circumstances, as I have outlined them, it is possible on a strict interpretation of section 14, that the bank will assume responsibility.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  In a situation of an overdraft there is no possibility of liability on behalf of the bank. The overdraft situation is that the bank facilitates you and you pay the cheque to the seller. If the bank directly pays the seller then it is a different situation we are talking about.

Mr. Molony: Information on David Molony  Zoom on David Molony  I accept that.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  On an overdraft situation, it does not arise.

Mr. Molony: Information on David Molony  Zoom on David Molony  I ask the Minister to look at it again. I do not want to get involved in an argument over words or that type of thing. Where there is an overdraft situation, effectively the cash moves from the bank. If I have no cash and if I draw a cheque on my bank for £1,000 and I have an overdraft, the bank are the people who transfer the £1,000. It is done in an ordinary, regular system of things that has us all believing that I am paying it. The reality is that the bank [1570] are paying the cash. I have no cash. I draw a cheque and cash is transferred through the clearing house system from the bank to the seller. I know that it is not the intention and I am not suggesting for a minute that somebody is trying to do something in this section that he is not saying. I believe that on a strict construction of section 14 that interpretation is possible. A simple amendment could regularise the position.

Mr. Jago: Information on Valentine Jago  Zoom on Valentine Jago  With regard to the working of a cheque, it is an instruction by the drawer to the bank to act as the agent to pay on his behalf. It is the purchaser who is actually paying for it. The bank are acting as the agent, on the wording of a cheque, to pay so and so.

Mr. Molony: Information on David Molony  Zoom on David Molony  I understand the way the system works, but I have some reservation about it. I ask the Minister to look at it again. The reality is that with an overdrawn account the money is paid by the bank. All that is required is an agreement between the finance house, namely the bank in the circumstances, and the customer for the repayment to the finance house of money paid. That is satisfied in the example I give. The money is paid by the finance house to the seller.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Even if the bank does not know what purpose the person wanted the overdraft for?

Mr. Molony: Information on David Molony  Zoom on David Molony  There may be a question on that. As long as there is agreement that I can draw the cheque I do not think they have to know the purpose for which I require it. I will leave the point there and we can come back to it on Report Stage when it should be looked at.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  If the Senator wishes to come back to it on Report Stage, fair enough. I would not like to promise him that I will look at it again, because I am perfectly satisfied in my own mind that, on the advice I get, the circumstances mentioned by the Senator do not arise as far as this is concerned. We are dealing here with a finance house which by its [1571] very nature is offering inducement to a particular individual to purchase.

Mr. Molony: Information on David Molony  Zoom on David Molony  I accept that completely. It is an accidental situation I am looking to rather than one that is intended by the section.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  If the sale was a credit sale, would that alter the position?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Credit card sales are not covered.

Mr. Molony: Information on David Molony  Zoom on David Molony  They were originally covered. I do not think it was intended they should be covered but it transpired when the Bill was first published that but for the insertion of the words “and in relation to the sale” that credit card transactions would be included. It was never intended by the Department that they should be included. In the same way, it is possible in the circumstances I outlined that a bank could be liable. I ask that the matter be looked at again.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It was not intended that they be covered.

Mr. Molony: Information on David Molony  Zoom on David Molony  I understand that but that was the reason for the insertion of the words “and in relation to the sale”. If the Minister adds the words “and at the instance of the seller” he would resolve the problem completely.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The Senator has indicated he intends to raise it on Report Stage. In the meantime I will look at it.

Mr. Molony: Information on David Molony  Zoom on David Molony  Fair enough. The Minister has far better resources for looking at it than I have.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I am beginning to wonder if I have.

Question put and agreed to.

Mr. Molony: Information on David Molony  Zoom on David Molony  I move amendment No. 16:

In page 10, line 5, after “document,” to insert “advertisement,”.

[1572] Perhaps the Minister could tell me if there are any circumstances in which advertisements could be brought within the ambit of the section?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I regret that I cannot accept the proposed amendment.

Mr. Molony: Information on David Molony  Zoom on David Molony  Without the amendment is there any circumstances in which advertisements could be construed as a document, notice or other written statement however it is described?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Not unless it applies to section 16 as well.

Mr. Molony: Information on David Molony  Zoom on David Molony  I would like to withdraw the amendment.

Amendment, by leave, withdrawn.

Government amendment No. 17:

In page 10, line 8, to delete “other than for resale”.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The original idea behind the inclusion of the phrase “other than for resale” in the definition of a guarantee was to confine its meaning to guarantees aimed at the ultimate user of the goods. This, of course, aligns completely with the normal meaning of a guarantee. However, it has been brought to my notice that the phrase, which I am now proposing to delete, could have the effect of enabling suppliers of guarantees to circumvent their liability under the Bill on the technicality that the guarantee which they supplied was supplied in connection with goods for resale and in consequence was not a guarantee within the meaning of the Bill. Clearly, such a situation could arise where, for instance, a manufacturer sells goods to a wholesaler or a distributor.

I am now satisfied that it is not really necessary to specify or imply target groups for whom a guarantee is intended. Anyone buying the goods and using them should have a claim under the guarantee if something goes wrong and this would be a normal and reasonable interpretation. I believe that following this amendment the statutory and ordinary [1573] meaning of guarantee will be effectively harmonised.

Amendment agreed to.

Section 15, as amended, agreed to.

Government amendment No. 18:

In subsection (2), page 10, to delete lines 14 and 15 and substitute “person supplying the guarantee”.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This is merely a drafting amendment and it has two effects. First, it makes it clear that the obligation to state the name and address of the guarantor rests with the guarantor. Under the former wording there could have been possibilities of confusion as to whether a person offering a guarantee would mean the guarantor only or any other person along the distributive line as well.

The amendment also removes the words “and against whom claims should be directed”. I feel it is as well to do this since the intention of this subsection is that the name and address of the guarantor should be given with the guarantee. The retention of the words involved might mislead someone into thinking that a guarantor could evade his responsibility by directing claims against someone other than himself.

Amendment agreed to.

Government amendment No. 19:

In subsection (6), page 10, line 26, to delete “the seller” and substitute “the manufacturer or other supplier”.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This, again, is a drafting amendment. Its effect is to remove any confusion there might be as to the person committing an offence for non-compliance with the section. It is clear that the person involved is the supplier of the guarantee, in other words, the manufacturer in most cases. It is possible that the use of the word “seller” in [1574] the subsection as drafted could be misunderstood to mean someone other than the person who actually supplies the guarantee.

Amendment agreed to.

Question proposed: “That section 16, as amended, stand part of the Bill.”

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  This is a point I could have made on section 15 if I was in the House but it is applicable to several sections. I do not know what is the position properly construed. I think all these sections, section 15 to 19, should be reviewed to ensure that there can be an exemption from the obligations of the sections in cases where the goods are being sold to a buyer who is not dealing as consumer and where it is fair and reasonable between the parties that the sections should not apply. If there is a deal where there is a guarantee element it might be written into a contract of 250 pages in which there are two people engaged in a very large deal. It might constitute a document, notice or statement. Maybe the Minister can tell me that the whole thing is already taken care of in the language. The whole thing should be clear that in any case where a person receiving the guarantee is not dealing as consumer that these sections do not apply. It is fair and reasonable that they should not where there is a fair and reasonable bargain.

The second point that requires consideration is what is the position about guarantees given in relation to goods which form part of a service which is dealt with in Part IV of the Bill?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I see no real need to confine it. However, if the Senator would like to give me some example of what he has in mind——

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  In relation to what?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  If he could give me an example in relation to what he is talking about.

[1575]Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  The best retort to that is to ask the question. I take it these sections relative to guarantees apply only in transactions with consumers. If they do not, then we are having a fundamental change of the law of guarantee. We should be very clear as to the effect this may have in transactions of a kind that the Minister's Department may never have seen.

There was an unfortunate word used in the insurance code in 1930 which put the banks in the position that they could not give guarantees. They were happy enough for a while to rely on the interpretation of the Act but it meant that they could not give guarantees without breaching the insurance code because they had not got a licence under the Insurance Company Act to carry on insurance business.

We should all be aware that guarantees arise as only part of large transactions where one of the elements may be the supply of goods by one party to the other. Maybe his subscription for the shares in the company could be goods that are guaranteed to reach a particular standard. I believe that there are characters in this country who will not know for ten years if the Sale of Goods and Supply of Services Act has changed the fundamental law of guarantee in relation to the transaction where one of the side elements may be the supply of goods. Unless there is a very keen awareness of the need for the change in the law of guarantee I urge very strongly that it be kept to those cases where there is protection required, where an ordinary consumer is acquiring goods. In these cases fair enough, the guarantee section seems to be right. Where we have people fully dressed, fully educated, well advised and their pockets full of gold, ambition or avarice, they do not need any statutory protection. Let them bargain for their interests, the equal parties they are. Unless we want to change the law in any case where we think there is need to ensure that the deal is a fair and reasonable one, that it needs to be expressed in statutory law that the contract of guarantee having regard to all the terms is a fair and [1576] reasonable one, otherwise I think that people will bargain as they do now and some day somebody will stumble on these sections and not be aware that they apply to the particular situation. They may not even be conscious of the fact that the language used in a paragraph of the document constitutes a guarantee as it is defined in this. The safe course for us is to deal with the mischief that we know about and not start changing the law in relation to situations which we do not know are creative of mischief.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Not being a legal man the Senator will excuse me if I get some advice on this as I go along. I understand that the situation is that if there is a guarantee offered it is covered. If there is a major contract being negotiated the details of the negotiation will form the guarantee. The contract will be a separate thing altogether rather than the guarantee that will be offered.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I urge the Minister to direct his advisers to consider the language to see if this creates any trouble in any situation.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I assure the Senator that I will do that. When it comes to Report Stage we can discuss it in greater depth.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  A guarantee as part of what it offers may undertake to provide services. Are implied terms in a contract of service imported into such a guarantee for services?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Service itself is not covered. If goods form part of a service then it is covered. For example, a television company that commits itself to supplying a television set to the Senator is providing a service.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  The point I am making is that under the subsequent part of the Bill dealing with the supply of services there are certain terms implied with regard to the necessary skill, the supply of services, skill and due care, that materials to be used will be sound and [1577] reasonably fit. Do those implied terms form part of a guarantee where the guarantee is to supply a service and/or repairs or whatever it is——

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Would the Senator leave that services element until we get to the services part of the Bill and we will go into it in greater detail at that stage?

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  On the understanding that we can refer it back to the guarantee section with which we are dealing.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  And remembering that the guarantee part is in Part II relative to the sale of goods.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mrs. McGuinness: Information on Catherine McGuinness  Zoom on Catherine McGuinness  This may well arise more under section 15 than section 16 but it applies to the guarantee field. I understand that the practice is arising, certainly in the motor trade if not elsewhere, of warranties being offered to purchasers where the warranty is given by a warranty company who are a different body entirely from the people who are actually supplying the goods. This is a sort of separate transaction in a way. I wonder if we could be sure that the terms about guarantees would cover a warranty offered in these circumstances, where the actual warranty company may not have any considerable connection or any connection at all indeed with the people who are supplying the actual goods?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I am not aware of that type of operation. What we are dealing with here is just a guarantee by the seller. If the Senator has knowledge of such an operation I would be very interested to hear of it and would check it out and see what could be done on Report Stage. I have no knowledge of it. The particular type of operation the Senator mentions is not covered here.

Mrs. McGuinness: Information on Catherine McGuinness  Zoom on Catherine McGuinness  I understand this is [1578] taking place, I will look into it for further details and see if I can get concrete examples sent to the Minister before Report Stage.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  We will use the resources of the Department to try to find this type of thing the Senator is talking about. We will talk about it on Report Stage.

Question put and agreed to.

Question proposed: “That section 17 stand part of the Bill.”

Mr. Molony: Information on David Molony  Zoom on David Molony  Subsection (1) provides: “where the seller of goods delivers a guarantee to the buyer irrespective of when or how it is delivered.” Would that apply to a guarantee that was delivered six months after the goods were sold and the possession of the goods passed.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The whole idea of the phrase, irrespective of when or how it is delivered, which is what the Senator is referring to, is designed to cover evasion situations where a guarantee might be mentioned only in sales leaflets not associated with particular transactions.

Mr. Molony: Information on David Molony  Zoom on David Molony  I appreciate that. We have to look sometimes to see what might happen not what is designed to happen under the section. What about the case where a contract is made and there has been no reference to a guarantee but a couple of months afterwards the question of a guarantee arises or if a guarantee is delivered with the goods, as sometimes happens with goods that one buys in a shop? You go in and you strike your bargain and you know absolutely nothing about a guarantee or you are not concerned about a guarantee and this section does not apply. If, subsequently, you find that there is a guarantee or a guarantee is delivered to you after the contract is made does it come within the ambit of the section?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It does apply. We do not see why it should not apply.

[1579]Mr. Molony: Information on David Molony  Zoom on David Molony  Could I ask the Minister for an explanation of subsection (2)? It is a little bit confusing.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Sometimes retailers provide their own written guarantees undertaking to service, repair or otherwise deal with goods purchased from them. In such a situation it would be unduly onerous that the retailers should carry liability not only in respect of his own guarantee but also in respect of any guarantee offered by a manufacturer for the same goods.

This subsection is intended to cater for this type of event. It states that it shall be presumed, unless the contrary is proved by the buyer, that the seller had not made himself liable under guarantees delivered where he has provided his own written undertaking that he will service, repair or otherwise deal with the goods following purchase. The type of retailer who would most likely offer guarantees on his own part would be one dealing with a specified range of goods such as a retailer in televisions who would have available his own maintenance staff to give effect to the terms of his guarantee.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Does this mean that this is an alternative to the means by which one can avoid having to comply with the terms of the guarantee under subsection (1)? In subsection (1)

the seller shall be liable to the buyer for the observance of the terms of the guarantee... unless he expressly indicates the contrary.

Does subsection (2) mean that, if the buyer gives a written undertaking that he will service, repair or otherwise deal with the goods following purchase, in that case, even without indicating to the contrary, he automatically avoids being responsible for the terms of the guarantee?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The manufacturer would be still responsible for his own part no matter what the situation is.

Mr. Molony: Information on David Molony  Zoom on David Molony  The manufacturer would [1580] remain liable but the supplier would not? In circumstances where, for example, goods are imported and somebody buys them in a shop, is it not rendering the whole system of guarantee worthless if the supplier provides an undertaking to look after the goods for some ridiculously short period so that he avoids completely any liability he might have under this section, especially if the manufacturer is a foreign company or foreign body?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The importer cannot do that. Amendment No. 20, on section 19, deals with it. It is to insert:

“and, where goods are imported, `manufacturer' includes the importer”.

Mr. Molony: Information on David Molony  Zoom on David Molony  So the importer will become fully liable to the manufacturer's guarantee?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That is right.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  Subsection (2) leaves it open. We may have a situation where there was no intention on the part of the seller to avoid being liable for the terms of the guarantee. By giving a written undertaking that he will service, repair or otherwise deal with the goods following purchase seems to give automatically the impression that he is avoiding the terms of the guarantee although there may be no intention on his part to do so.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It would be a question of giving two guarantees. Why should he give two guarantees?

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  The guarantee may be just a written undertaking to service, repair or otherwise deal with the goods. It could be a relatively minor undertaking. It might be far less than the guarantee that would normally be given or the guarantee that goes with the goods and which he is now presumed to be no longer responsible for.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I would remind the Senator that the is the exact definition that we use of guarantee under section 15: “the manufacturer or other supplier [1581] will service, repair or otherwise deal with the goods following purchase”.

Mr. Molony: Information on David Molony  Zoom on David Molony  So the personal or written undertaking that he gives would have to comply with all the requirements of section 16?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Molony: Information on David Molony  Zoom on David Molony  The guarantee would therefore be as comprehensive as the manufacturer's guarantee?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Molony: Information on David Molony  Zoom on David Molony  Why have it then?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It would not necessarily be as comprehensive.

Mr. Molony: Information on David Molony  Zoom on David Molony  I take that point. I asked about this because I was confused, but I have advanced myself to a further stage of confusion. The undertaking that will be given by a supplier will have to comply with all the conditions of guarantees as are set out in this part of the Bill.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This will be additional to the manufacturer's guarantee.

Mr. Molony: Information on David Molony  Zoom on David Molony  It will with the difference that, unless the undertaking of the supplier is as comprehensive as the manufacturer's one, one will have no right of action against one's supplier. It is sometimes very difficult to get at the manufacturer of goods. Subsection (2) proposes to abandon rights that one would otherwise have against the supplier.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The guarantee is really a means of selling but he can opt out.

Mr. Molony: Information on David Molony  Zoom on David Molony  This is it then. The supplier can opt out?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Molony: Information on David Molony  Zoom on David Molony  As I understand subsection (2), he can opt out where he produces his own undertaking?

[1582]Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  He can opt out voluntarily.

Mr. Molony: Information on David Molony  Zoom on David Molony  Without giving any undertaking at all. As I understand subsection (2), the retailer can opt out where he provides his own undertaking.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  He can opt out without providing his own undertaking?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Subsection (1) helps the situation. Subsection (1) ensures that where a seller, usually a retailer, is passing on a guarantee to a buyer, he, the seller, will be liable for observance of the terms of the guarantee unless he expressly indicates the contrary to the buyer at the time of delivery. As regards guarantees, the retailer fulfils the role of middleman, he passes on the manufacturer's guarantee to the buyer.

Mr. Molony: Information on David Molony  Zoom on David Molony  He has the option to have that.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The provision ensures that the consumer would be made aware at purchase if it is the case that the retailer will not fulfil the guarantee irrespective of when or how it is delivered. It is designed to cover a vehicle situation where a guarantee might be mentioned only in sale but not associated with delivery.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Every retailer seeking advice from a country attorney under section 17 should be advised to take advantage of subsection (1) and specifically exclude the guarantee for himself.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  He can do that if he likes, but he can produce the guarantee too. It is a sales gimmick really.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  If he does not do it he takes on a liability to fulfil the guarantee.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  It is hard luck on the attorneys around the country.

Mrs. McGuinness: Information on Catherine McGuinness  Zoom on Catherine McGuinness  If he completely opts out of offering a guarantee he then will become liable under the main sections [1583] of the Bill, just as an ordinary sale of goods?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Molony: Information on David Molony  Zoom on David Molony  It goes further than that in the sense that the really advantageous rights under those sections are given to a consumer. This section deals with every purchaser. It is not limited to a consumer.

Question put and agreed to.

Question proposed: “That section 18 stand part of the Bill.”

Mr. Molony: Information on David Molony  Zoom on David Molony  I presume that any abuse under section 18 is also a criminal offence under section 11 of the Bill. Is my understanding of that correct?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  No.

Mr. Molony: Information on David Molony  Zoom on David Molony  Section 11 (4) is being reviewed, but I thought it was an offence for somebody to put up a notice limiting a buyer's rights further than he was entitled to at law.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It is an offence.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  This section 11 (2) will end the old trick where the person was asked to sign a guarantee and was signing something less than was available to him in common law?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  All that is fine if we are dealing with consumers. I have thought for a long time that it is a dreadful disgrace that we have lived with these guarantees that were in fact taking away people's rights. I can see all sorts of transactions where people will write letters, where people will do quite important pieces of business, where they will be supplying goods, and they will not know that there is a criminal offence involved under the provisions of this. We are creating criminal offences without a [1584] clear need to have it so. Perhaps there is something of which we have not heard, but why can we not limit it? Why is the concept of dealing as consumer, which is written all over the implied warranties area, not continued into this guarantee area?

Mr. Molony: Information on David Molony  Zoom on David Molony  What we are talking about here is a question of limiting a person's right, but where one cannot limit somebody's rights the condition that purports to limit somebody's right becomes void. Is that a correct interpretation?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That is correct.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  What about subsection (2)? I take it that we are not intending to exclude a proper provision for arbitrators in the event of a dispute. We should at least say this should not prevent an agreed appointment of an arbitrator.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  No.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  If it does anything it maintains the situation where, if a decision is necessary as to whether goods are defective or not, it must be referred to an bitrator.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The subsection makes void any term of a guarantee which purports to make the guarantor the sole authority to decide on whether goods are defective or whether a buyer is entitled or not to present a claim. Surprising as it may seem, such claims by manufacturers sometimes appear in guarantees. For example, the expression “our decision on all questions relating to alleged defects shall be conclusive”. Such clauses are no doubt useful to the manufacturer in fortifying his argument, with a customer but they do not in law take away the consumer's right to go to court to settle a genuine dispute. Any attempt to exclude the jurisdiction of the courts is held to be against the policy of the law and completely ineffective. Another legal maxim supports the consumer—no man shall be a judge in his [1585] own cause. Not even a judge may try a case in which he has a direct personal interest. Therefore where the validity of any such claim by a manufacturer is in doubt, nevertheless this subsection declares unequivocally that it is void.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  The matter is not at all clear as Senators and the Minister suggested. In the equivalent sections in the misrepresentation code in Britain, or like provisions, the question has been raised as to whether the restriction on exclusions has effectively limited the right to provide for arbitration. I notice in this Bill that the Minister proposed to the Dáil and had the Dáil agree to the proposal to delete words which appeared in the first draft of section 42—“the court or arbitrator may declare the contract subsisting”. The words “or arbitrator” were deleted. Every other word in that section appears in the UK equivalent of this Bill—The Misrepesentation Act, 1967. I do not know the Minister's opinion of this whole question. We have a provision for arbitration. There is no question of taking away the court's right. The court has got certain basic rights with regard to these situations. Is an arbitrator not acting on behalf of one of the parties if he is acting as an agreed arbitrator? Is he not acting on behalf of the guarantor? Should he not be the sole authority, if the parties agree that somebody is to be an arbitrator? I do not want there to be any risk that because an arbitrator may be acting on behalf of supplier as well as the buyer he cannot act at all by virtue of this section. We want to be quite clear that there is a right for an arbitrator to be agreed between the parties.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  We do not put a restriction on the rights of both sides to appoint an arbitrator.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Let us say it.

Mrs. McGuinness: Information on Catherine McGuinness  Zoom on Catherine McGuinness  “Acting on his behalf”—it is not on his behalf alone that an arbitrator would be acting. Would it make it clearer if we put in “on [1586] his behalf alone” or “solely on his behalf”. It is clear that the section means somebody acting only on behalf of the supplier or the seller, whereas an arbitrator would normally be acting on behalf of the buyer as well? It might make it a little clearer if we could add that.

Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  An arbitrator is not acting on behalf of either of the parties. That interpretation could not be put on this subsection. An arbitrator specifically does not act on behalf of either of the parties; he decides between the parties. The fear that this would exclude the appointment of an arbitrator is not a valid one. This could not possibly be interpreted as excluding an arbitrator.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That is the very point. The arbitrator by the very nature of his task does not act on either behalf; he acts as an arbitrator, a decider. The very point that Senator Ryan made covers that.

Mr. Molony: Information on David Molony  Zoom on David Molony  It seems a very subtle difference indeed. The arbitrator is perhaps acting on his own behalf—he is getting paid for it—but it is open to that interpretation.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  It is a point we can consider between now and Report Stage. I am sure Senator Ryan is right in that.

Question put and agreed to.

Government amendment No. 20:

In subsection (1), page 11, line 7, after “guarantee” to insert “and, where goods are imported, `manufacturer' includes the importer”.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It was represented to me by the Confederation of Irish Industry that the provision of the sections on guarantees as presently drafted would unfairly put Irish manufacturers at a disadvantage vis-a-vis their foreign competitors. This point was also raised by Senator FitzGerald on Second Stage and [1587] by a number of other Senators. The essence of the case made was that manufacturers of imported goods could escape liability for the enforcement of guarantees given with goods since they were outside the jurisdiction. Irish manufacturers on the other hand would be completely liable for fulfilling their terms of their own guarantees, a fact incidentally to which they do not object. What I propose, therefore, is that in the case of imported goods the importer will be liable for the fulfilment of the terms of the guarantee as if he were the guarantor. If therefore the buyer is unable to legally enforce a guarantee because the manufacturer is outside the jurisdiction, he will still be able to obtain redress against the importer.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Can an importer exclude the guarantee under section 17 (1) on the grounds that he is a mere seller?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  No.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Why?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This amendment will make him responsible, he will be caught under this amendment.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  This section makes serious inroads in the doctrine of privity and the right to sue goes to as many persons as may acquire the goods during the duration of the guarantee. Am I right in that?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That is correct.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  The buyer is defined as including persons who acquired title to the goods. If the device now being used in some contracts for the sale of goods, the retention of title clause, were to be used on a wide scale, would it have the effect of denying the right given under this section?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I have not the answer to that question. I will get it and let the Senator have it on Report Stage.

Amendment agreed to.

[1588] Section 19 as amended, agreed to.

Question proposed: “That section 20 stand part of the Bill.”

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Perhaps the Minister could indicate the changes and the reason for the changes over the 1893 position?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The actual time at which the buyer of goods is deemed to have accepted them is of critical importance when it comes to considering the remedies available to the buyer for breach of contract. Normally if a seller breaches a condition of the contract, for example, proper title or merchantable quality and so on, the buyer is entitled to reject the goods, to get his money back and claim damages. Once the goods have been accepted, however, the breach of conditions must be treated by the buyer as a breach of warranty only. This type of breach only entitled the buyer to claim damages.

Section 34 of the 1893 Act provides for the buyer's rights to examine the goods bought before he is deemed to have accepted them. Section 35, on the other hand, states that the buyer is deemed to have accepted them when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them.

The courts have held that section 35 prevails over section 34 and a buyer is deemed to have accepted the goods if he has carried out any act which is inconsistent with ownership of the seller notwithstanding that he has not exercised his right under section 34 to examine the goods before acceptance. One example of a case which illustrates the existing precedence of section 35 over section 34 is that of Harding & Company Limited versus Hillar and Fowler, where notwithstanding that the buyer had not had the opportunity of examining [1589] the goods, a resale and delivery of the goods by the buyer, an act deemed to be inconsistent with the ownership of the seller, deprived him of the right of rejection. It is clearly unfair that the buyer should be robbed of his right to examine the goods by the provisions of section 35 of the 1893 Act. Accordingly the Bill rectifies this situation and qualifies the application of section 35 in a transaction involving a sale of goods with the provision of section 34. The effect of the new section 35, which is section 20 of the Bill therefore, will be that the buyer will now have a reason to examine the goods he buys before being regarded as having accepted them. Thus if the goods prove unsatisfactory the buyer will not now be prevented from having his rightful remedy, that is the rejection of the goods.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  Even though he may have agreed to sell on before he examined them, if he finds that on examination there is a defect, does he still have his right?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  I presume the person, the third party of the sale on would not want them in any event.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  As a result of our freedom we lived for an additional dozen years with the benefit of that bit of law which was amended in Britain in 1967. The Minister took advantage of the 12 years and amended it better than the British.

Question put and agreed to.

Question proposed: “That section 21 stand part of the Bill.”

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  This is an important section which effects a very important change in the law. Is this not the section which really makes for example, the section with regard to supplied cars [1590] not as important as it might otherwise be? This is difficult to understand, but apart from that it seems that one can go and get the things repaired by somebody else and recover the cost. Is that correct?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That is true.

Mr. Molony: Information on David Molony  Zoom on David Molony  One has the option of listing the defects to the supplier and if he does not remedy the defects one can call off the whole deal. In the past when the goods had been delivered to the purchaser, despite the fact that the goods had passed to the purchaser, if a defect emerged the goods could be returned to the supplier with the request that he remedied the defect, and if he would not remedy the defect, the deal would be off, and presumably one could sue him for a return of his money.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Or one could get it done elsewhere and change for it.

Mr. Molony: Information on David Molony  Zoom on David Molony  It is a very important section. It is very effective and very wide-ranging.

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  There is the question of acting promptly to determine whether a person has his rights or not and the onus of proving that he was prompt lies on the buyer. Promptness, or the appropriate degree of promptness, I presume, will depend on the circumstances of each case. It seems a vague word to have in a statute, a word which can depend on the subjective judgment essentially and the judge as to whether a person's rights are lost or not.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  By the nature of what we are trying to get at here and the various circumstances that can arise, promptness has to be a vague term.

Mr. Molony: Information on David Molony  Zoom on David Molony  It would depend on the durability of the item as to what is prompt.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Yes.

Question put and agreed to.

Question proposed: “That section 22 stand part of the Bill.”

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  The revision of section 55 is a very important section. The change in that is the kernel of the change that we are now making. The point I wanted to make is in regard to fair and reasonable. Will we discuss fair and reasonable, the definition of which is that set out in the Schedule, at this stage or will we leave it until after Easter?

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Whose business is it to prove whether it is fair and reasonable?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  It is a matter for the courts to decide.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Of course, but on whom is the burden of proving it?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Whoever wants to use the exclusion clause has to prove that it is fair and reasonable.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Is it spelled out?

Mr. Cooney: Information on Patrick Mark Cooney  Zoom on Patrick Mark Cooney  It is not spelled out here.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  The British spelled it out by way of statute.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Subsection (4) provides for this.

Mr. Molony: Information on David Molony  Zoom on David Molony  My interpretation of it is that the consumer would be obliged to show that it would not be fair and reasonable to allow an exclusion clause to operate.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This brings us back to the Schedule where there is the provision that an exemption clause shall not be enforceable to the extent that it is shown that it should not be fair and reasonable to allow reliance on the terms. Section 2 (3) provides that where a question arises as to whether a term of a contract is fair and reasonable, regard shall be had to the criteria set out in the Schedule.

[1592]Mr. Molony: Information on David Molony  Zoom on David Molony  But the onus would be on the consumer to show the court that it would be unfair and unreasonable to allow the supplier to rely on the exclusion clause.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The onus, I am advised, is on the person using the exclusion clause.

Mr. Molony: Information on David Molony  Zoom on David Molony  I find that very hard to see in the section. By any standard an exclusion clause as part of a contract would stand unless it were shown that it was unfair and unreasonable that it should be allowed to continue to stand. That implies that the onus of proof in that particular respect would have to be on the consumer.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  My legal advice is as I have just given it to the Senator.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Could we have that very clearly? The provision is that in the case of a contract of sale with an exemption term the exemption term shall not be enforceable to the extent that it is shown that it would not be fair and reasonable to have an exemption. Who, but the buyer, would be concerned to prove that and to show that? In the United Kingdom the position is that such a term, if in a contract, would have to be shown to be reasonable by whoever was claiming it was reasonable to exclude the implied terms. So the burden of proof would be different here from what is the UK position in terms of the Unfair Terms Act, 1977. It is for those claiming that a contract term satisfies the requirement of reasonableness to show that it does.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  If the Senators feel very strongly about it, I am prepared to have a look at it and, if necessary, to clarify the situation on Report Stage. However, the provision in question is similar to the corresponding provision in the UK Supply of Goods (Implied Terms) Act, 1973.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  That was amended in 1977. Perhaps at the end of the day I will be proved wrong in this but [1593] one way or the other, our labours will not have been in vain.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  Obviously, we are anxious that our labours will not be in vain and that we will finish up with the best Bill possible but the provision is taken directly from the 1973 UK Act.

Question put and agreed to.

Question proposed: “That section 23 stand part of the Bill.”

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  This conflict of law position will have to be borne in mind when we reach the misrepresentation part because while we may be able to prevent the exclusion of implied terms, the misrepresentation law will be the law that will be applicable. However, we shall come to that later.

Question put and agreed to.

Question proposed: “That section 24 stand part of the Bill.”

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  May I suggest an amendment to section 61 on a point which has been raised in some textbook as to whether there is the right to rescind a contract of sale of goods where innocent misrepresentation has survived the Sale of Goods Act? Section 61 (2) of the Sale of Goods Act only saves the rules of common law and the right to rescind is an equitable right, not a common law one. I would suggest that the doubt be ended by—in our case—inserting the words “and of equity” after the rules of the common law in subsection (2) of section 61 of that other Act. I think this is the right place to raise the point but I had in my mind the introduction of a new subsection on this.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  I think the Senator will accept that this is very much a legal item and that it would be totally impossible to [1594] reply either in a positive or a negative way at this stage. However, I will consider the points that have been made by the Senator and I will come back to this on Report Stage if we feel that it is necessary to do as he has suggested. The one guiding principle I have on this legislation is that there is nothing political in what we are trying to do and that we are trying to produce the best legislation possible on behalf of the consumer.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  There is nothing necessarily immoral in being political.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  That has crossed my mind sometimes.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  The name of the gentleman who raised the doubt in question is Atiyah and the publication is, Sale of Goods Act, 5th edition, pages 301-2.

Question put and agreed to.

Section 25 agreed to.

Question proposed: “That section 26 stand part of the Bill.”

Mr. Molony: Information on David Molony  Zoom on David Molony  We had some discussion with the Minister's colleague last week about the corresponding section, to section 26, (1) (b). The paragraph relates to the title and warranty as to title and my complaint is again about the deletion of the words “or known” from the paragraph. Effectively, what the position is is that the buyer, even though he knows of a defect in the title, will take a better title than he knows himself to be taking and it seems to me to be something that is undesirable. I do not think it advances the consumer's position any one bit to have left the words in and I would ask, why the words “or known” were deleted?

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  This is an added protection for the consumer. It is absolutely [1595] vital that the seller must inform the buyer of all such——

Mr. Molony: Information on David Molony  Zoom on David Molony  But the hirer knows perfectly well that there is a defect in the title here and he is entitled to sue for damages. I am querying the deletion of the words “or known”. They have only one meaning. I suggest that we put in the words “or known”. Then the buyer would have to know.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  He might not know. If they are left in, the seller could say that the buyer had known or should have known. What we are trying to do is to put a responsibility on the hirer to be aware of the fact.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  The words were in the original Bill and were deleted. This was probably gone into in the 1946 Hire Purchase Act. I should have thought that the original words “or known to the hirer” would stand.

Mr. Molony: Information on David Molony  Zoom on David Molony  On the Minister's point, if it were the case that the buyer should have known or ought to have known, I would not make the point, but it is not that. Very frequently in legislation one sees the expression “known or ought to have known”, or something similar. We are not talking about a case where he should have known. It is a question of whether it was known.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  We felt that what we have here is the best way to protect the interests of the consumer.

Question put and agreed to.

Section 27 agreed to.

Question proposed: “That section 28 stand part of the Bill.”

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I would suggest to the Minister that there may be need somewhere in this part of the Bill to repeat the definition of “merchantable quality,” that is if you are going to have [1596] a definition of merchantable quality, such as you have in the new section 14, where there is reference to goods “of merchantable quality” and the provision that any reference to unmerchantable goods shall be construed accordingly. The Act to which the definition is extended in section 14 is the Sale of Goods Act. It is only where the word “unmerchantable” appears in the Sale of Goods Act as read together with Part II of this Bill that the word is given the extended meaning. If I am right about that, that extended meaning does not come into section 29.

When you construe section 29 of this Bill, you use the word “unmerchantable” without the benefit of the extension of the word in section 14 of the Sale of Goods Act. But the word “unmerchantable” as in section 29 is not in the Sale of Goods Act and does not get the benefit of the extension which is made by subsection (3) of section 14 of the other Act.

We are dealing with this point in another context in relation to an entirely different range. As we stand at this moment, there is an implied condition that where goods are subject to a hire purchase agreement they shall be of merchantable quality. There is no definition at the moment of what goods are of merchantable quality. These words are such as the court may construe but we are now proposing to say because we here properly import into section 28 the implied terms of section 14 that goods of merchantable quality shall be fit for the purpose or purposes for which goods of that kind are commonly bought and add “and as durable” as it is reasonable to expect with regard to any description applied. I would argue very strongly for the deletion of the words “and as durable”.

A word like “durable” has a kind of meaning which cannot be applied to everything one buys. There is an old distinction known to the Roman Law between fungible and non-fungible goods. Fungible goods are goods which as you use you consume. You use a loaf of bread by eating it but you do not use a chair properly by knocking it into [1597] little pieces. There are goods whose very nature is that they are not durable but there are lots of goods of that kind to which the word “durable” does not apply. It is not the appropriate word at all. They may not be of merchantable quality; although they are fit for the purposes for which they are commonly bought they are not “and as durable”. Durability does not arise in relation to them. This will only fox up the market situation in relation to secondhand goods. There are people who are so poor that they can only afford to buy secondhand or thirdhand shoes that are priced accordingly and carpets that are half worn out and glad enough they are to have something to put over a cold floor. In the first place I am dubious about the value of the definition. Merchantable quality is defined here as meaning that goods are saleable, that they are fit for the purpose for which they were sold in so far as is reasonable, having regard to the price paid for them. If you bought a shirt for 10p you would be glad if it was there the following morning considering a cigarette would nearly cost you as much. An improvement in the definition as I suggest would prevent much waste of money in terms of the number of actions that would be likely to be brought for reason of this inclusion of the words “as durable”. One man's need is another man's toy. There are all sorts of different purposes for which goods are bought. I would argue that the words “and as durable” should be left out of section 14 and, therefore, not carried forward to section 28.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  There was a prolonged discussion on section 14 on the whole question of durability and I do not think it would be appropriate to go back to it now on section 28. The Senator in the earlier part of his contribution made reference to subsection (2) of section 28. He was referring to 14 (3). If I go through subsection (2) here and give as detailed information as I can it might be of assistance to the House.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I did not [1598] realise it but I should have made that particular point on section 29, which is where the word “unmerchantable” appears.

Mr. R. Burke: Information on Ray Burke  Zoom on Ray Burke  The subsection corresponds with section 14 (2) of the 1893 Act. Again the objective must be stressed, to afford the credit buyer the same implied terms as were given to a cash buyer under Part II. Accordingly, the structure and purpose of this section corresponds with the aforementioned section in Part II. A merchantable quality as a concept is not defined in this subsection or in later subsections. Instead it will be seen that the text of the present subsection stated that there is an implied condition within the meaning of section 14 (3) of the 1893 Act, as set out in the table to section 10 of this Bill. The current requirement as regards merchantable quality under hire purchase agreements is determined by section 9 (1) of the Hire Purchase Act, 1946. That section stated that goods let under a hire purchase agreement are of merchantable quality except where they are secondhand and this fact is stated in the memorandum of agreement. The condition is said not to apply as regards defects of which the owner could not reasonably be aware. The improvements made under the present subsection (2) are that merchantable quality would be deemed to be inherent in every hire purchase agreement regardless of whether the goods are new or secondhand, or of whether the owner is aware of defects in the goods, subject to the two exceptions listed in paragraphs (a) and (b) of the subsection. Again I stress that the two exceptions are those which are governed by the dictates of commonsense.

Question put and agreed to.

Progress reported; Committee to sit again.

The Seanad adjourned at 5 p.m. until 2.30 p.m. on Wednesday, 16 April 1980.


Last Updated: 14/09/2010 13:00:06 First Page Previous Page Page of 6 Next Page Last Page