My Lords, the Bill’s provisions on consumer contracts for goods build on existing legislation, such as the Sale of Goods Act, and on court- developed common law. Government Amendments 2, 4 and 6 are to ensure that the greater clarity the Bill provides does not override an existing common-law distinction between severable and entire contracts. A severable contract is divisible into parts, which are intended to be independent of each other, so different parts of the payment can be assigned to different parts of the trader’s performance. The amendments make it clear that, where a contract is severable, the consumer may have the right to reject those faulty goods or they may have the right to terminate the whole contract. That will depend on the nature of the goods and the fault and the details of the contract. In some cases, it will be quite right for a consumer to reject all the goods under a contract, even if it is severable. The existing common law recognises that and the amendments are to make it clear that the common law on this applies.
The noble Baroness, Lady Hayter, asked in Grand Committee whether these amendments could create a new incentive for traders to try to make their contracts severable. I hope I have given reassurance that the amendments refer to an existing concept. A contract will not be severable simply because it is described as such but will depend on the genuine agreement and arrangement between the parties in the circumstances. The guidance to the Bill will cover when a contract is severable and when a consumer might be entitled to terminate the whole contract. As I have explained, these amendments are to ensure that the consumer’s clearer rights in Clause 20 should not override the common-law position for severable contracts.
Clause 20 reflects the equivalent provision for Scotland in the Sale of Goods Act—that is, Section 15B—and in related legislation. Therefore, for Scots law, Clause 20 is intended to restate the existing provisions without altering the common law. I beg to move.