Hire purchase and consumer protection adjudication in caricom courts

• Author: Andrew D. Burgess
• Position: Senior Lecturer in Law, University of the West Indies
• Pages: 179-221

HIRE PURCHASE AND CONSUMER PROTECTION

ADJUDICATION IN CARICOM COURTS

ANDREW D. BURGESS*

INTRODUCTION

Over the last forty years or so, most secured instalment sales

contracts relating to consumer durables in the Caribbean Community

(Caricom) have been carried out in the form of hire purchase

agreements.1 In strict legal theory, such agreements consist of a

contractual arrangement where goods are let on hire to the consumer

with an option (but not an obligation) to purchase them at the end of

the period of hire.2 The market context of the transactions is one in

which the seller or other party extending credit has a far superior

bargaining power to the consumer/hirer, does not bargain with the

consumer/hirer, and produces his pre-drafted standard form contract

to be signed by the consumer on a take-it-or-leave-it basis.3 The

consumer hire purchase transaction, then, involves the same complex

of problems, both social and legal which inhere in most consumer

" Senior Lecturer in Law, University of the West Indies. This article was

written while the author was a Visiting Academic, Oxford University.

1 There has been no systematic statistical study of

the

prevalence of these

contracts in Caricom. However, all the available evidence supports this

statement.

2 See

Helby

v.

Mathews

[1895] 8 A.C. 471;

Gomez

v.

Olds Discount

Co.

(TCC)

Ltd.

(1964) 7 W.I.R. 98, 100 per Hyatali J.A. See also Antigua

infra,

n.5 s.2(l); Bahamas

infra,

n.5 s.2(l); Barbados

infra,

n.5 s.2(l);

Belize

infra,

n.5 s.2(l); Grenada

infra,

n.5 s.2(1); Jamaica

infra,

n.5

s.2(l); St. Lucia

infra,

n.5 s.2(l); Trinidad and Tobago

infra,

n.5 s.2(l).

3 As to this form of contracting, see generally Kessler

"Contracts

of

Adhesion:

Some

Thoughts about Freedom of

Contract"

(1943) 43

Col.

L.R.

629,

Shuchman

"Consumer Credit by Adhesion

Contracts"

(1962) Temp.

L.Q. 125, 181, Bolgar

"The Contract

of

Adhesion:

A

Comparison

of

Theory

and

Practice"

(1972) 20 Amer. J. Comp. L. 53, Burgess

"Consumer Adhesion Contracts and Unfair

Terms:

A Critique

of

Current

Theory and a

Suggestion"

(1984)

15

Anglo- Amer.L.Rev. 255.

transactions, namely, the likelihood of abuse by the party, usually a

relatively large corporation, with the superior bargaining power.4

This article is a study of how the courts in Caricom have approached

this problem in consumer hire purchase cases. Hire purchase cases are

of particular interest in Caribbean consumer jurisprudence because, to

date,

the hire purchase transaction is the only major consumer

transaction type that has been subjected to extensive legislative

intervention in Caricom.5 The existence of this legislation affords a

valuable opportunity to observe the approach of Caricom courts to

consumer protection issues both in situations where consumer

protection legislation exists and those where consumer protection

legislation does not exist but depends entirely upon the common law.

It is thought that, at a time when many Caricom countries are

enacting6 or are contemplating7 enacting comprehensive consumer

protection legislation, such a study could provide useful insights into

the courts' approach to consumer protection issues.

The article proceeds in three broad stages. First of all, it examines

all the decisions of Caricom courts involving hire purchase transactions

in territories with hire purchase legislation. Next, it surveys decisions

involving hire purchase transactions in territories where there is no

legislation. Finally, it highlights and explains the major judicial

tendencies evident in these cases.

4 See, e.g.,

United Dominions Corporation (Eastern Caribbean)

Ltd. v.

Stewart (1968) 12

W.I.R. 396.

For a

discussion of

the

problematics of this

statement, however, see Trebilcock "The

Doctrine

of

Inequality

of

Bargaining

Power:

Post-Benthamite Economics

in

the House

of

Lords"

(1976) U. of T.L.J.359.

5 Eight territories have enacted hire purchase legislation modelled on hire

purchase statutes in the U.K. These territories are Antigua The Hire

Purchase

Act,

1987;

Barbados

Hire Purchase

Act,

Cap.

328;

Belize

Hire

Purchase

Act,

Cap.220;

Grenada

Hire Purchase

Ordinance,

1961;

St.

Lucia

Hire Purchase

Ordinance,

1962;

and Trinidad and Tobago

Hire

Purchase

Act,

Chap.

82:33,

based on the U.K.

Hire

Purchase Act,

1938

and the Bahamas

Hire Purchase Act Ch.315

and Jamaica

Hire Purchase

Act,

1974,

fashioned

on the

U.K.

Hire

Purchase

Act,

1965.

The

territories

which have

not

enacted any

legislation

are

Dominica,

Guyana, Montserrat,

St. Kitts and Nevis and St. Vincent.

6 See, e.g., Trinidad and Tobago

Unfair Contract Terms

Act,

1985,

and

Consumer Protection and Safety

Act,

1985,

and Antigua,

Unfair Contract

Terms

Act,

1987.

7 Barbados, for example, has draft legislation which is to be shortly

presented

to

Parliament.

Adjudicating Consumer Protection Issues and

Hire Purchase Legislation

To date, there have been three cases decided in Caricom courts at

a time when hire purchase legislation was in existence.8 These cases,

which are all decisions of the Trinidad and Tobago Court of Appeal,

are United Dominions Corporation (Eastern Caribbean) Ltd. v.

Stewart,9 Olds Discount Co. (T.C.C.) Ltd. v. Gomez10 and Olds

Discount Co. (T.C.C.) Ltd. v. Valere.11 These decisions will be

examined to ascertain the approach of Caricom courts to consumer

protection legislative reforms. Before doing this, however, it may be

useful to highlight the nature and extent of consumer protection in hire

purchase legislation in this region.

I. THE LEGISLATION OUTLINED

Despite the fact that it does not expressly state this, hire purchase

legislation in Caricom has as its basic objective the creation of a

framework of protection for consumers in hire purchase

transactions.12 To achieve this objective, the legislation has restricted

the common law freedom of contract principle in three main areas of

the hire purchase agreement. These relate to the formalities of the

agreement, the substantive rights and obligations in the agreement, and

the remedies available in respect of the agreement. This will be

explored more fully in the remainder of this section.13

8 Hire

purchase

legislation

exists in Jamaica

now.

When the case

of Murray

v.

Finance Corporation

of

Jamaica (1965) 8

W.I.R.

132 was

decided,

that

legislation was not yet enacted.

9 (1968)

12

W.I.R. 396.

10 (1964) 7 W.I.R. 98.

11 (1971) 17 W.I.R. 346.

12 As to the historical reasons for the enactment of

the

U.K. legislation on

which that in Caricom is based, see Goode

Hire Purchase

Law and

Practice

(London: 1970) 1-17. Indeed, some of

the

Acts, e.g., Part II of

the Jamaican Act, actually head some of their provisions as being

"Consumer Protection" provisions.

13 The legislation is dealt with extensively by Cumberbatch,

"A Comparative

Survey

of

the Legislation Relating

to

Contract

of

Hire Purchase

in the

Commonwealth

Caribbean"

(1989)

1

Caribbean Law

&

Bus.

79.