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

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803 is an English contract law case involving the sale of goods and exclusion clauses. Decided under the Unfair Contract Terms Act 1977 and the Sale of Goods Act 1979, it centres around a dispute where defective cabbage seeds caused crop failure, leading to a claim for substantial loss. The case explores whether exclusion clauses in the contract are valid and reasonable.

Finney Lock Seeds Ltd agreed to supply George Mitchell (Chesterhall) Ltd with 30 lb of Dutch winter cabbage seed for £201.60. The invoice accompanying the delivery included clauses limiting liability for defective seeds and excluding liability for loss or damage from seed use. Crop failure occurred on 63 acres, resulting in a claim for £61,513 in production loss. The main issues were whether the limitation clause covered the defective seeds and whether, under the Unfair Contract Terms Act 1977, the limitation was reasonable.

In the High Court, Parker J held that the goods sold were not considered seeds due to their complete failure, rendering the exclusion clause ineffective. In the Court of Appeal, the majority, Oliver LJ and Kerr LJ, agreed with Parker J that the limitation clause did not apply because the sold items were not functional seeds. However, Lord Denning MR dissented, arguing that the clause applied to limit liability even for defective seeds. Despite this, all agreed that the clause was invalid under the Supply of Goods (Implied Terms) Act 1973 (now SGA 1979 and UCTA 1977) as it was deemed unreasonable.

The House of Lords unanimously upheld Lord Denning MR's judgment that the limitation of liability was not effective and was unreasonable. Lord Denning emphasised the historical struggle against exemption clauses and the unfairness in contracts. Lord Bridge's leading judgment acknowledged the removal of judges' temptation to ascribe tortured meanings to exemption clauses after the Unfair Contract Terms Act 1977.

George Mitchell is notable as Lord Denning MR's last judgment before retiring. His dissenting opinion, upheld by the House of Lords, challenged the historical common law emphasis on freedom of contract. The case highlights the shift towards controlling unfair terms through legislation, eliminating the need for strained interpretations to achieve fairness. The decision emphasises the importance of scrutinising the reasonableness of exclusion clauses in contracts under legislative frameworks.
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