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Published online by Cambridge University Press: 16 January 2009
I. Introduction
The anomaly of including consumer hire agreements within the purview of the Consumer Credit Act 1974 is more apparent than real. Although contracts of hire do not generally involve the provision of credit, they frequently afford a method of long-term disposition akin to such deferred-purchasing devices as hire-purchase and conditional sale. Indeed, one of the decisions which featured most prominently in the Crowther Committee's discussion of this form of surrogate credit involved a hirer who had failed to realise that the contract under which he held the chattel (a caravan) was one which precluded any acquisition of title by him. The abuse to which this type of transaction was subject clearly justified an extension of the Act to certain forms of consumer hiring. This extension was consonant with the policy, advocated by Crowther, of regulating transactions according to their function rather than their form.
1 Cmnd. 4596 (1971), paras. 6.2.53 et seq.
2 Galbraith v. Mitchenall Estates Ltd. [1965] 2 Q.B. 473.Google Scholar
3 s. 16 (6) makes special provision for the exemption of hire agreements which relate to meters or metering equipment supplied by certain public corporations.
4 It should be noted that the agreement need only be capable of subsisting for more than three months. Thus, an agreement for an indeterminate period such as a periodic hiring from week to week, or month to month until terminated by notice, or for a fixed period not exceeding three months but with an option for the owner to renew beyond the three months satisfies this requirement. Only agreements for a fixed term not exceeding three months with no option to the owner to renew, or an option to the hirer to renew beyond the three month period, are outside s. 15 (1) (b). It follows that non-contractual bailments “by agreement” will always fall within the provision: see post.
5 See, for example, Coggs v. Bernard (1703) 2 Ld.Raym. 909; R. v. McDonald (1885) 15 Q.B.D. 323; Gilchrist Watt & Sanderson Pty. Ltd. v. York Products Pty. Ltd. [1970] 3 All E.R. 825.Google Scholar
6 e.g., Morris v. C. W. Martin & Sons Ltd. [1966] 1 Q.B. 716, 731–732Google Scholarper Diplock L.J.; Johnson Matthey & Co. Ltd. v. Constantine Terminals Ltd. [1976] 2 Lloyd's Rep. 215Google Scholar.
7 Non-commercial agreements and small agreements admittedly enjoy some exemption from the Act. See infra.
8 The draftsman was clearly aware, in another context, of the need to segregate bailments conferring rights of use and enjoyment upon the bailee from those other forms of bailments, whereunder a service is provided by the bailee to the bailor (such as hire of custody and hire of work and labour). The definition of hire-purchase in s. 189 (1) of the Act requires (inter alia) that goods be “bailed or (in Scotland) hired in return for periodical payments by the person to whom they are bailed or hired.” Although this makes no specific reference to use and enjoyment, it is improbable that any bailee would make periodical payments to his bailor other than in return for rights to that effect. A not dissimilar awareness is shown by the authors of the recent Law Commission Working Paper No. 71, Implied Terms in Contracts for the Supply of Goods (1977)Google Scholar, in their discussion of the meaning of the words “supply of goods” and in their concern that this expression should be defined to exclude such phenomena as pledge and the delivery of goods to a carrier by a consignor; see para. 12. The definition of “hirer,” also in s. 189 (1) of the 1974 Act, advances one no further than s. 15 (1) itself.
9 ss. 114 to 122.
10 s. 18 (1) (b), (3).
11 Goode, The Consumer Credit Act 1974, p. 16; there is authority for the proposition that the word “agreement” in a statute, means “a mutual contract on consideration” (see Wain v. Walters (1804) 5 East 10 per Lord Ellenborough C.J., see also Helby v. Matthews [1895] A.C. 471, per Lord Herschell L.C. at pp. 475, 476) but the Consumer Credit Act does envisage a gratuitous bailment (see discussion of s. 79, post) and, in any event, the consideration need not necessarily be in the form of hire charges.
12 The taking of goods on approval, or on sale or return, will admittedly produce in the majority of cases not a gratuitous bailment but a bailment for mutual advantage: Gutter v. Tait (1947) 117 L.T. 1Google Scholar; Fairley & Stevens (1966) Ltd. v. Goldsworthy (1973) 48 D.L.R. (3d) 554.Google Scholar However, this does not necessarily mean that the relationship is contractual, because there is a clear difference between the element of reward in bailment and the contractual requirement of consideration: see, for example, Andrews v. Home Flats Ltd. [1947] 2 All E.R. 698Google Scholar; Morris v. C. W. Martin & Sons Ltd. [1966] 1 Q.B. 716.Google Scholar Contrast the position of a seller left in possession after property has passed to the buyer: Demby Hamilton & Co. Ltd. V. Barden [1949] 1 All E.R. 435Google Scholar; Sharp V. Batt (1930) 25 Tas.L.R. 33.Google Scholar There may well be, between the phase in which the seller derives sufficient advantage from his custody to be characterised as a bailee for reward and that in which his bailment may properly be said to have become involuntary, an intermediate period during which he holds the goods gratuitously but by (original or subsequent) agreement; cf. Sinclair v. Juner, 1952Google Scholar S.C. 35; Mitchell v. Davis (1920) 37 T.L.R. 68Google Scholar; Port Swettenham Authority v. T. Wu & Co. [1978] 3 W.L.R. 530.Google Scholar
13 e.g., Roufus v. Brewster and Brewster [1971] 2 S.A.S.R. 218, 223–224, 234Google Scholar; Walker v. Watson [1974] 2 N.Z.L.R. 175Google Scholar; New Zealand Shipping Co. Ltd. v. A. N. Satterthwaite & Co. Ltd. [1975]Google Scholar A.C. 154, 167.
14 W.P. No. 71, para. 11. Credit cards may also be bailed under a consumer hire agreement. If the bailor is not licensed to enter into such an agreement, it will be unenforceable (s. 40 (1) ) and the bailor may even be incapable of recovering the card by reliance on the title, especially after the abolition of detinue by s. 2 (1) of the Torts (Interference with Goods) Act, 1977.
15 Aside from s. 56, on which see post.
16 Consumer Credit Act 1974, s. 17 (1) (b).
17 See Goode, The Consumer Credit Act 1974, 3.30. Bennion suggests that an agreement will be a small agreement provided that the hirer is able to terminate it before he has paid more than £30 under it, whether or not he does in fact do so. This, in Bennion's view, will cover periodic rental agreements where the hire charges for a single period do not exceed £30. (See Bennion. Consumer Credit Control, 1, para. 2820, analysis). This construction depends upon interpreting the words “agreement which does not require the hirer to make payments exceeding £30,” as meaning “agreements under which the hirer cannot be compelled to make payments exceeding £30,” This is an unjustified reading of s. 17 (1) (b). At the time the agreement is made the fact that it may be terminated at the end of one period does not mean that it will be. The agreement has the potential, provided no further action is taken by the hirer, to continue for ever and as such may “require” payments to be made in excess of £30.
18 Quaere whether a clause requiring payment to be made to the lessor upon termination by the hirer would fall beyond the Act by virtue of s. 18 (1) (a) and (2). It is submitted that it is not the object of these subsections to require the segregation and severance of every individual clause in an agreement which is not exclusively referable to an agreement which falls within the Act, but merely to separate those larger aspects of agreements which are capable of standing as individual agreements outside the Act (such as insurance of the bailed property).
19 See Consumer Credit Act 1974, ss. 51, 74 (2), 78 (7), 85 (3), 181.
20 See discussion of s. 79 post.
21 Dawson (Clapham) Ltd. v. Dutfield [1936] 2 All E.R. 232Google Scholar; Esso Petroleum Ltd. v. Customs and Excise Commissioners [1976] 1 W.L.R. 1Google Scholar; and see Atiyah (1976) 39 M.L.R. 335.
22 Roufus v. Brewster and Brewster [1971]Google Scholar S.A.S.R. 218, 233.
23 Queen's Sales & Service Ltd. v. Smith (1963) 48 M.P.R. 363Google Scholar; Leggo v. Welland Vale Manufacturing Co. Ltd. (1901) 2 O.L.R. 45.Google Scholar
24 (1962) 107 C.L.R. 633.
25 e.g., Mowbray v. Merryweather [1895] 2 Q.B. 640; cf. Southland Harbour Board v. Vella [1974] 1 N.Z.L.R. 526.Google Scholar
26 Oliver v. Saddler & Co. Ltd. [1929]Google Scholar A.C. 584; Griffiths v. Arch Engineering Ltd. [1968] 3 All E.R. 217.Google Scholar
27 Palmer (1975) 4 Anglo-American Law Review 207, 211–226.
28 At least, it requires no payment to the bailor. The word “payment” can hardly be construed as extending to payments required under the bailment to be made to third parties. S. 189 (1) affords no clarification of this question for it describes payment merely as including tender. See further infra.
29 McCarthy v. British Oak Insurance Co. Ltd. [1938] 3 All E.R. 1Google Scholar; cf. Rainsbury v. Ross (1843) 4 N.B.R. 179.
30 s. 5.
31 (1967) 69 S.R.(N.S.W.) 226.
32 Cf. Sutton v. Temple (1843) 12 M. & W. 52; Silverman v. Imperial London Hotels Ltd. (1927) 137 L.T. 57.Google Scholar
33 Cf. McKenzie v. Ocean Accident & Guarantee Corporation Ltd. (1921) 20 O.W.N. 406.Google Scholar
34 s. 18 (2).
35 s. 18 (3).
36 Palmer, Bailment, pp. 80–87.
37 Coast Crane Co. Ltd. v. Dominion Bridge Co. Ltd. (1961) 28 D.L.R. (2d) 295.Google Scholar
38 British Crane Hire Corporation Ltd. v. Ipswich Plant Hire [1975] 1 Q.B. 303.Google Scholar
39 Fowler v. Lock (1872) L.R. 7 C.P. 272, 282.
40 Cf. Mardorf Peach Co. Ltd. v. Attica Sea Carriers Corporation of Liberia [1977]Google Scholar A.C. 850, 869–870, per Lord Wilberforce.
41 Consumer Credit Act 1974, Pts. III and IV.
42 See the authorities collected in Palmer, Bailment, Chap. 7.
43 e.g., Wiebe v. Lepp (1974) 46 D.L.R. (3d) 441Google Scholar; Marshall v. Dibble [1920] 39 N.Z.L.R. 497.Google Scholar
44 e.g., Superlux v. Plaisted [1958]Google Scholar C.L.Y. 195; Wiebe v. Lepp (supra).
45 Palmer and Rose (1977) 26 I.C.L.Q. 169, 181–183.
46 See A. L. Hamblin Equipment Pty. Ltd. v. Federal Commissioner of Taxation (1974) 4 A.T.R. 208Google Scholar, and (generally) Turner (1974) 48 A.L.J. 63, 134.
47 In certain circumstances he will lose the right to terminate also: see Consumer Credit Act 1974, s. 101 (7).
48 s. 56 (3) (a).
49 s. 53 (3) (b).
50 e.g., Andrews v. Hopkinson [1957] 1 Q.B. 229.Google Scholar
51 ibid.; and, as to purely economic loss, on the authority of Esso Petroleum Co. Ltd. v. Mardon [1976]Google Scholar Q.B. 801.
52 [1969] 1 A.C. 552.
53 [1963] 2 All E.R. at pp. 42–44, per Pearson L.J.
54 Australian authority tends slightly to this view: Star Express Merchandising Co. Pty. Ltd. v. V. G. McGrath Pty. Ltd. [1959]Google Scholar V.R. 443; Derbyshire Building Co. Pty. Ltd. v. Becker (1962) 107 C.L.R. 633.Google Scholar
55 As, for example, in Hadley v. Droitwich Construction Co. Ltd. [1967] 3 All E.R. 911, 914Google Scholar, per Sellers L.J.
56 Haseldine v. Daw & Son Ltd. [1941] 2 K.B. 343Google Scholar; cf. Riverstone Meat Co. Pty. Ltd. v. Lancashire Shipping Co. Ltd. [1961]Google Scholar A.C. 807.
57 Working Paper No. 71, Implied Terms in Contracts for the Supply of Goods (1977).Google Scholar
58 See generally (1975) 4 Anglo-American Law Review 207.
59 Discussed in (1977) 26 I.C.L.Q. 169.
60 s. 7.
61 Cf. s. 23 of the South Australian Consumer Transactions Act 1972–1973 which does make provision to this effect upon termination “by a hirer.”
62 Associated Distributors Ltd. v. Hall [1938] 2 K.B. 83Google Scholar; Bridge v. Campbell Discount Co. Ltd. [1962]Google Scholar A.C. 600; Granor Finance Ltd. v. Liquidator of Eastore Ltd., 1974Google Scholar S.L.T. 296; I.A.C. (Leasing) Ltd. v. Humphrey (1972) 126 C.L.R. 131.Google Scholar
63 There is some authority for the proposition that where the container is returnable against a deposit, whilst the contents may be sold, the container is only hired: see Beecham Foods Ltd v. North Supplies (Edmonton) Ltd. [1959] 1 W.L.R. 643.Google Scholar
64 Consumer Credit Act 1974, s. 101 (3).
65 Unfair Contract Terms Act 1977, s. 4; quaere whether this section does not pro tanto repeal s. 173 (1) of the Consumer Credit Act in so far as the latter section is legitimately construed as prohibiting any indemnity upon termination “by the hirer,” whether reasonable or unreasonable.
66 Not binding on the court; see Chandler v. D.P.P. [1964]Google Scholar A.C. 777; cf. Lord Reid in D.P.P. v. Schildkamp [1971]Google Scholar A.C. 1, 10.
67 Unfair Contract Terms Act 1977, s. 13 (1).
68 s. 132 (1) (a) and (b).
69 s. 132 (2).
70 The Consumer Credit Act 1974, p. 185Google Scholar,; cf. Bentinck v. Cromwell Engineering Co. Ltd. [1971] 1 Q.B. 324.Google Scholar
71 s. 173 (3).
72 Which might, if it occurred, transform the agreement into a regulated hire-purchase agreement; see s. 189 (1).
73 Crowther appeared to envisage the protection extending to hire; see Report of Committee on Consumer Credit, Cmnd. 4596, paras. 6.2.59, 6.10.15.
74 Consumer Credit Act 1974, s. 170 (1).
75 Lee v. Atkinson (1609) Yelv. 172.
76 See Paton, Bailment in the Common Law, p. 289.
77 [1973] 1 Q.B. 233.
78 Roberts v. Roberts [1957]Google Scholar Tas.S.R. 84.
79 Harris v. Lombard (New Zealand) Ltd. [1974] 2 N.Z.L.R. 161.Google Scholar
80 Ichard v. Frangoulis [1977] 1 W.L.R. 556Google Scholar; see also Shelley v. Paddock [1978] 3 All E.R. 129.Google Scholar
81 [1966] 1 Ch. 499, esp. at p. 509.
82 [1977] A.C. 850.
83 At p. 878.
84 [1976] Q.B. 835, 847.
85 [1977] A.C. at pp. 873–874.
86 At pp. 869–870, 872–873.
87 Tankexpress A/S v. Compagnie Financeère Belge des Petroles S.A. The Petrofina [1946]Google Scholar A.C. 76, 90.
88 Or, perhaps, an event which does not constitute a breach by the hirer but is still expressed to give rise to forfeiture. As to enforcement upon such an event, see s. 76.
89 Or any other act of enforcement for non-breach.
90 [1965] 2 Q.B. 473. Cf. Credit Services Investments Ltd. v. Evans [1974] 2 N.Z.L.R. 683Google Scholar; subsequent proceedings [1975] 2 N.Z.L.R. 560.
91 Cf. Unfair Contract Terms Act 1977, s. 3 (2) (b) (i), which may now apply to terms like those involved in Galbraith's case.
92 Lloyds Bank Ltd. v. Bundy [1975]Google Scholar Q.B. 326; A. Schroeder Music Publishing Co Ltd. v. Macaulay [1974] 1 W.L.R. 1308Google Scholar; Clifford Davis Management Ltd. v. W. E. A. Records Ltd. [1975] 1 W.L.R. 61Google Scholar; Levison Patent Steam Carpet Cleaning Co. Ltd. [1977] 3 W.L.R. 90Google Scholar; Photo Production Ltd. v. Securicor Ltd. [1978] 1 W.L.R. 856.Google Scholar
93 Cf. s. 22 (1) of the South Australian Consumer Transactions Act 1972–1973, which empowers the Credit Tribunal to avoid or modify upon the application of a consumer “any term or condition of a consumer lease that is harsh or unconscionable, or such that a Court of Equity would give relief.”
94 See, e.g., Consumer Credit Act 1974, ss. 61 (1), (2), 62 (3), 63 (5), 64 (5).
95 Cmnd. 4596, especially para. 6.7.17.
