23 July 1958
English |
v. |
Donnelly |
The issue before us is within a narrow compass. Under section 2 of the Hire Purchase and Small Debt (Scotland) Act, 1932, certain conditions are laid down in regard to hire purchase contracts, compliance with which is declared to be necessary if a contract to which the Act applies is to be binding on the hirer. Admittedly these conditions were not satisfied in the present case, and it necessarily follows that the contract in question would be void and unenforceable if this section of the Scottish Act applies to it. But the pursuer contends that this Act does not apply to the present case which, according to him, is governed by the law of England and by an English Hire-Purchase Act passed in 1938. His argument is that the Twentieth Century Banking Corporation is a company registered in England, that they executed their part of this contract in England, that it falls to be performed in England, and that in the contract there is inserted an express provision whereby the parties agreed that the law of England was to apply. The protection afforded by the Scottish Act of 1932therefore, on this contention, cannot be invoked by the first defender. The issue is accordingly whether or not the Act of 1932,, the Scottish Act, applies to this contract.
Section 11 of that Act provides:—
"This Act may be cited as the Hire Purchase and Small Debt (Scotland) Act, 1932, and shall extend to Scotland only."
Section 1 of the Act (which is amended by the Hire-Purchase Act, 1954, in a respect which is not material to the present question) provides:—
"This Act shall apply to any contract entered into after the passing of this Act, notwithstanding anything contained in such contract, in whatsoever terms it may be expressed and whether it be truly one of sale or of hire, if it is a contract whereby …"
certain provisions are made which admittedly apply to the present case.
In the first place it appears to me to be clear, in the light of the express statutory provision in section 1, that Parliament intended that parties should not be able to contract out of the Act, if it applied; and this seems to me to be confirmed by the provisions of section 9 of the Act whereby "any contract or agreement by virtue of which any right conferred by this Act on the hirer, purchaser, cautioner or guarantor under a contract to which this Act applies, is taken away or limited shall to that extent be void." Accordingly, if the contract in question is one to which the Act applies, the fact that parties have agreed to invoke the law of England will not displace the obligations imposed in regard to the contract by the Scottish Act.
In the second place, therefore, I must consider whether the Scottish Act applies or not. It is quite true that in general under private international law it can be said that the validity of a contract is governed by the proper law of the contract, namely, by the law which the parties intend or may fairly be presumed to have intended to invoke—see Dicey, Rules 153 and 148. But that general rule is displaced where an Act of Parliament has expressly provided otherwise, and has applied certain conditions as necessary for the validity of the contract. The situation might have been different if the statutory provisions had not been mandatory—see Vita Food Products Inc. v. Unus Shipping Co.
In the present case, however, the statutory provision contained in the Scottish Act of 1932 (as amended in 1954) is mandatory. The object of section 2 of the Scottish Act is to lay down certain conditions precedent for valid hire purchase contracts, designed to ensure that persons who hire goods under them are properly certiorated of the conditions contained in the agreements into which they are entering. The Act is a piece of social legislation designed for the protection of certain persons, i.e., members of the public who hire articles through companies such as the Twentieth Century Banking Corporation Limited. It is not intended to benefit nor to protect these companies. The way the protection operates is the avoidance of the contract of hire if certain statutory safeguards in the hirer's interest are not satisfied. Hence it follows that the test for the applicability of the Act, which under section 11 extends only to Scotland, is whether or not the contract was entered into in Scotland (see section 1), irrespective of where that contract is ultimately completed or is to be executed. The first defender in the present case undoubtedly entered into this contract in Scotland, and it necessarily follows that the Scottish Act therefore applies. If so, the general rules of private international law applicable to contracts are superseded by this express statutory provision. Such a situation is envisaged by Dicey in Rule 149.
In these circumstances, in my opinion, the Sheriff arrived at the correct conclusion and the appeal should accordingly be refused.
"This Act shall apply to any contract entered into after the passing of this Act, notwithstanding anything contained in such contract …"
To hold that clause 13 had the effect of superseding section 2 would, it seems to me, be to ignore these words and to ignore the manifest purpose of the Act which was to give to persons entering into hire purchase contracts in Scotland a measure of protection against those persons with whom they are dealing. This just means that, if financiers from the other side of the Border wish to do valid business with hirers in Scotland, they must do so with due regard to the Scottish Act, and that they cannot get round the Act by putting in a clause to the effect that some other law is to apply to the contract.
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