The impact of Lord Bridges decision in the case of George Mitchell v Finney Lock Seeds Ltd

We start this discussion by outlining the facts in the case of George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd[1]. Finney Lock (defendant) provided cabbage seed to a farmer, George Mitchell (plaintiff) for circa. £200. The plaintiff had planted the seeds which subsequently did not grow as expected. The crop that did develop was not fit for human consumption, and therefore the whole crop was ploughed in by the Plaintiff. George Mitchell subsequently brought a claim against Finney Lock for damages of circa. £60,000 for a breach of contract.

Within that contract was an exemption clause that stated that in the event of seeds supplied proving defective, the defendant would (at their discretion) replace the defective seeds. The issue brought before the court was:

(1) whether the contractual exemption clause applied to the breach; and if so

(2) was it considered ‘fair and reasonable’ under s.55 of the Sale of Goods Act 1979[2] and s.2(2) of the Unfair Contract Terms Act 1977[3] (UCTA) for the defendant to rely on it in this case.

Initially the case was heard in the High Court[4] who ruled against Finney Lock Seeds finding that the seeds (as described) could not be considered seeds on the basis they did not work and therefore the exclusion clause being relied upon had no contractual effect. This led to an appeal in the Court of Appeal[5] and finally a case being presented to the House of Lords. It is from here we consider the case law speech of Lord Bridge and its importance in the development of UK contract law.

Lord Bridge’s leading judgment – House of Lords1983

Through his speech,(para. 15)[6] Lord Bridge discussed his view of the legitimacy of what can be regarded as “fair and reasonable”. He raises the question as to whether courts have the ability to consistently interpret cases using modern statutory provisions[7]. The common law issue had previously been dismissed by the trial judge and therefore Lord Bridge considered the issue in a statutory sense – this is an important development in the cases chronology.

In relation to s.55 of the Sale of Goods Act 1979, Lord Bridge determined that ‘the contract terms were not fair and reasonable’. He also clearly stated:

“the exercise of any power to decide what is fair or reasonable will involve legitimate judicial differences and that the courts should refrain from interfering with the decision of the previous court unless they feel that there was a clearly wrong decisions or that the case was decided on some clearly erroneous principle.”[8]

The final ruling was therefore given in favor of the plaintiff, although it was found that Finney Lock Seeds had limited liability in the contract with George Mitchell.

Section 55 Sale of Goods Act 1979 and its relation to Schedule 2 of the Unfair Contract Terms Act 1977

Section 55 outlines that, where liability arises under a contract it may be cancelled out or varied by agreement. However there are provisions that can have effect on whether the contract can be cancelled or varied. Sub-section five of the aforementioned section is virtually comparable to schedule two of the UCTA, including the provisions that require judges to justify if a contract was reasonable (S.11 UCTA). For example consideration should be given to fairness in terms of bargaining power, inducements to the sale of the goods and other opportunities available to buy the goods from another supplier.

Conclusion

The UCTA and the Sale of Goods Act 1979 have a close relationship with each other. They cannot be considered in pure isolation and the case here demonstrates how the two can be ‘linked’ when considering what is ‘reasonable’.

Historically, various common law decisions had evolved to govern the validity of exclusion clauses. Previous cases had been based on the ‘freedom on contract[9]’ principle and therefore, it was felt by some, had not provided a sufficient balance of power towards the citizen, often being ruled in favor of the ‘big concern’.

Various pieces of case law[10] came forth from this era, and as Lord Denning noted “It was a bleak winter for our law of contract.”[11] In this case the House of Lords had the right to over-ride the contractual provisions and in doing so created a statutory provision that created a passé of the common law as it stood. The contract terms were found to be unfair and unreasonable and therefore created a new precedent for this kind of matter.[12]

This case is therefore seminal in contract law terms and demonstrates that the common law is no longer felt to provide adequate control of the operation of exclusion clauses, the most effective control is now found in statutory provisions (e.g UCTA)