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George Mitchell (Chesterhall) Ltd v Finney Lock Seeds [1983] 2 AC 803

Exclusion clauses construction and Unfair Contract Terms Act 1977

Facts

The Claimant (George Mitchell) and the Defendant (Finney Lock Seeds Ltd) entered into an agreement where the Defendant would supply the Claimant with 30lb of Dutch winter cabbage seed. The invoice for the seeds, which was considered to be a part of the contract, stipulated that liability of the defendant was limited to replacing the seeds or the plants which were sold, where such were found to be defective. The clause however excluded liability for loss or damage, including consequential loss or damage which arose from the seed being used. The Claimant planted the seed on 63 Acres of his land. The seeds were a failure, producing a plant which was too small and which could not be eaten by humans. The losses of the Claimant as a result came out to £60,000 in addition to interest.

Issues

The issues in this case were two, namely whether the exclusion clause could extend to the seeds used by the Claimant, bearing in mind that they were unfit to do the job they were sold to do and secondly, whether extending the effect of the exclusion clause in this way would be reasonable under s.2(2) of the Unfair Contract Terms Act 1977.

Held

It was held that the exclusion did extend to the seeds sold to and used by the claimant, and that to claim otherwise would torture the language of the contract. However, it was also observed that on the facts this was an unfair term which could be struck down under the Unfair Contract Terms Act 1977. The court concurred with Lord Denning MR’s dissent in the Court of Appeal (in what was his Lordship’s final judgement), that the Act had now liberated the courts from needing to twist the words of contracts in this way in order to achieve justice.

“the passing of... the Unfair Contract Terms Act 1977, had removed from judges the temptation to resort to the device of ascribing to words appearing in exemption clauses a tortured meaning so as to avoid giving effect to an exclusion or limitation of liability when the judge thought that in the circumstances to do so would be unfair.” (Lord Bridge)


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