''George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd''
EWCA_Civ_5and_[1983.html" ;"title="982
EWCA Civ 5and [1983">982
EWCA Civ 5and [19832 AC 803 is a case concerning the sale of goods and exclusion clauses. It was decided under the
Unfair Contract Terms Act 1977
The Unfair Contract Terms Act 1977c 50 is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most impor ...
and the Sale of Goods Act 1979.
Facts
Finney Lock Seeds Ltd agreed to supply George Mitchell (Chesterhall) Ltd with 30 lb of Dutch winter
cabbage
Cabbage, comprising several cultivars of ''Brassica oleracea'', is a leafy green, red (purple), or white (pale green) biennial plant grown as an annual vegetable crop for its dense-leaved heads. It is descended from the wild cabbage ( ''B.&nb ...
seed for £201.60. An invoice sent with the delivery was considered part of the contract and limited liability to replacing 'any seeds or plants sold' if defective (clause 1) and excluding all liability for loss or damage or consequential loss or damage from use of the seed (clause 2). of crops failed, and £61,513 was claimed for loss of production.
The two main issues in the case were whether the limitation clause should be interpreted to cover the seeds actually sold, given that the seeds were wholly defective and so did not do a seed's job at all and whether, under the
Unfair Contract Terms Act 1977
The Unfair Contract Terms Act 1977c 50 is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most impor ...
, s 2(2) the limitation was reasonable (s 11).
Judgments
High Court
Parker J held that the goods sold were not "seeds" at all and he did not look at the statute. On the basis that clause 1 said 'any seeds or plants sold', he held that what was sold could not be considered seeds (because they simply did not work) and therefore the exclusion in clause 2, which was attached to what was sold in clause 1, had no effect.
Court of Appeal
The majority,
Oliver LJ and
Kerr LJ, held the limitation clause did not apply because, like Parker J, they held that what was sold was not seed. However,
Lord Denning MR
Alfred Thompson "Tom" Denning, Baron Denning (23 January 1899 – 5 March 1999) was an English lawyer and judge. He was called to the bar of England and Wales in 1923 and became a King's Counsel in 1938. Denning became a judge in 1944 when ...
dissented from the majority's reasoning and argued the clause applied to limit liability for the seeds sold even if the seeds were defective. Ultimately, all agreed that the clause was invalid under the
Supply of Goods (Implied Terms) Act 1973
The Supply of Goods (Implied Terms) Act 1973c 13 was an Act of the Parliament of the United Kingdom that provided implied terms in contracts for the supply of goods and for hire-purchase agreements, and limited the use of exclusion clauses. The r ...
(see now s 55
SGA 1979 and
UCTA 1977) because it was unreasonable.
In a memorable passage and his last-ever judgment, Lord Denning MR outlined the problem of the case in this way.
House of Lords
The House of Lords unanimously upheld the judgment of Lord Denning that the limitation of liability to the cost of the seeds was not effective, because given the relative
positions and capability of insurance, it failed the reasonableness test.
Lord Diplock
William John Kenneth Diplock, Baron Diplock, (8 December 1907 – 14 October 1985) was a British barrister and judge who served as a lord of appeal in ordinary between 1968 and until his death in 1985. Appointed to the English High Court in ...
gave the first judgment.
Lord Bridge
Lord is an appellation for a person or deity who has authority, control, or power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the peerage in the United Kingdom, or ar ...
gave the leading judgment. He agreed with Lord Denning MR that clause 2 applied to the seeds in question, and that it was a "strained construction" (following Lord Diplock's dicta in ''
Photo Production Ltd v Securicor Transport Ltd
is an English contract law case decided by the House of Lords on construction of a contract and the doctrine of fundamental breach.
Facts
Photo Productions Ltd engaged Securicor to guard their premises at night. A night-watchman, Mr Musgrove, ...
'' to say otherwise. At page 810 he said,
On the question of the term's fairness, Lord Bridge held,
On the question of fairness, the decisive evidence was that witnesses (for the seedsmen) had said the industry's practice had always been to negotiate damages claims if they seemed genuine and justified. That was clear recognition that the relevant condition would not be fair or reasonable.
Lord Scarman, Lord Roskill and Lord Brightman concurred.
''In the House of Lords,
Leonard Hoffmann QC
Leonard Hubert "Lennie" Hoffmann, Baron Hoffmann (born 8 May 1934) is a retired senior South African–British judge. He served as a Lord of Appeal in Ordinary from 1995 to 2009.
Well known for his lively decisions and willingness to break ...
and Patrick Twigg made submissions for George Mitchell and
Mark Waller QC made submissions for Finney Lock Seeds''.
Significance
''George Mitchell'' was
Lord Denning
Alfred Thompson "Tom" Denning, Baron Denning (23 January 1899 – 5 March 1999) was an English lawyer and judge. He was called to the bar of England and Wales in 1923 and became a King's Counsel in 1938. Denning became a judge in 1944 when ...
's last judgment in the Court of Appeal before he retired. His dissenting opinion, which was upheld by the House of Lords, was partly a riposte to the last century of common law, dating back at least to ''
Printing and Numerical Registering Co v Sampson
''Printing and Numerical Registering Co v Sampson'' (1875) 19 Eq 462 is an English contract law and patent case. It is most notable for strong advocacy of the principle of freedom of contract put forward by Sir George Jessel MR. The strict princi ...
'' where
Lord Jessel MR had propounded
freedom of contract
Freedom of contract is the process in which individuals and groups form contracts without government restrictions. This is opposed to government regulations such as minimum-wage laws, competition laws, economic sanctions, restrictions on pri ...
as a core public policy.
By contrast, Lord Denning thought that the ability of the courts to control unfair terms, now granted through legislation, had made it possible to apply sensible principles when construing contracts. There was no need to twist the meaning of words to reach a fair result, if unfair contract terms could be scrapped on the ground that one party had
unequal bargaining power
Inequality of bargaining power in law, economics and social sciences refers to a situation where one party to a bargain, contract or agreement, has more and better alternatives than the other party. This results in one party having greater power ...
.
However, the ''
contra proferentem
''Contra proferentem'' (Latin: "against heofferor"), also known as "interpretation against the draftsman", is a doctrine of contractual interpretation providing that, where a promise, agreement or term is ambiguous, the preferred meaning shou ...
'' rule (as used in ''Houghton v Trafalgar Insurance Co. Ltd ''
Case report
to give a "fair result" through an unreasonable interpretation of an exemption clause) still forms part of the European Community
The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisbo ...
's consumer protection law as imposed in the Unfair Consumer Contract Terms Directive
The Unfair Terms in Consumer Contracts Directive''93/13/EECis a European Union directive (then called European Economic Community directive) governing the use of surprising or onerous terms used by business in deals with consumers.
National law
I ...
br>93/13/EEC
See also
*English contract law
English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries ...
Notes
References
*F Kessler, ‘Contracts of Adhesion – Some Thoughts About Freedom of Contract’ (1943) 43(5) Columbia Law Review 629
{{DEFAULTSORT:George Mitchell (Chesterhall) Ltd V Finney Lock Seeds Ltd
Lord Denning cases
English unfair terms case law
English interpretation case law
1983 in British law
House of Lords cases
1983 in case law
Cabbage