George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Diplock,Lord Scarman,Lord Roskill,Lord Bridge of Harwich,Lord Brightman |
| Judgment Date | 30 June 1983 |
| Judgment citation (vLex) | [1983] UKHL J0630-4 |
| Date | 30 June 1983 |
| Court | House of Lords |
[1983] UKHL J0630-4
House of Lords
Lord Diplock
Lord Scarman
Lord Roskill
Lord Bridge of Harwich
Lord Brightman
My Lords,
This is a case about an exemption clause contained in a contract for the sale of goods (not being a consumer sale) to which the Supply of Goods (Implied Terms) Act 1973 applied. In reliance on the exemption clause the sellers sought to limit their liability to the buyers to a sum which represented only one third of one per cent of the damage that the buyers had sustained as a result of an undisputed breach of contract by the sellers. The sellers failed before the trial judge, Parker J., who, by placing upon the language of the exemption clause a strained and artificial meaning, found himself able to hold that the breach of contract in respect of which the buyers sued fell outside the clause. In the Court of Appeal both Oliver L.J. and Kerr L.J., by similar processes of strained interpretation, held that the breach was not covered by the exemption clause; but they also held that if the breach had been covered, it would in all the circumstances of the case not have been fair or reasonable to allow reliance on the clause, and that accordingly the clause would have been unenforceable under the Act. Lord Denning M.R. was alone in holding that the language of the exemption clause was plain and unambiguous; that it would be apparent to anyone who read it that it covered the breach in respect of which the buyers' action was brought; and that the passing of the Supply of Goods (Implied Terms) Act 1973 and its successor, 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 Denning M.R. agreed with the other members of the court that the appeal should be dismissed but solely on the statutory ground under the Act of 1973 that it would not be fair and reasonable to allow reliance upon the clause.
My Lords, I have had the advantage of reading in advance the speech to be delivered by my noble and learned friend, Lord Bridge of Harwich, in favour of dismissing this appeal upon grounds which reflect the reasoning although not the inimitable style of Lord Denning's judgment in the Court of Appeal.
I agree entirely with Lord Bridge's speech and there is nothing that I could usefully add to it; but I cannot refrain from noting with regret, which is, I am sure, shared by all members of the Appellate Committee of this House, that Lord Denning's judgment in the instant case, which was delivered on 29 September 1982, is probably the last in which your Lordships will have the opportunity of enjoying his eminently readable style of exposition and his stimulating and percipient approach to the continuing development of the common law to which he has himself in his judicial lifetime made so outstanding a contribution.
My Lords,
I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend, Lord Bridge of Harwich. I agree with it, and for the reasons which he gives would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speech to be delivered by my noble and learned friend, Lord Bridge of Harwich. I agree with it, and for the reasons which he gives I would dismiss the appeal.
My Lords,
The appellants are seed merchants. The respondents are farmers in East Lothian. In December 1973 the respondents ordered from the appellants 301b. of Dutch winter white cabbage seeds. The seeds supplied were invoiced as "Finney's Late Dutch Special". The price was £201.60. "Finney's Late Dutch Special" was the variety required by the respondents. It is a Dutch winter white cabbage which grows particularly well in the area of East Lothian where the respondents farm, and can be harvested and sold at a favourable price in the spring. The respondents planted some 63 acres of their land with seedlings grown from the seeds supplied by the appellants to produce their cabbage crop for the spring of 1975. In the event, the crop proved to be worthless and had to be ploughed in. This was for two reasons. First, the seeds supplied were not "Finney's Late Dutch Special" or any other variety of Dutch winter white cabbage, but a variety of autumn cabbage. Secondly, even as autumn cabbage the seeds were of very inferior quality.
The issues in the appeal arise from three sentences in the conditions of sale endorsed on the appellants' invoice and admittedly embodied in the terms on which the appellants contracted. For ease of reference it will be convenient to number the sentences. Omitting immaterial words they read as follows:
1. "In the event of any seeds or plants sold or agreed to be sold by us not complying with the express terms of the contract of sale … or any seeds or plants proving defective in varietal purity we will, at our option, replace the defective seeds or plants, free of charge to the buyer or will refund all payments made to us by the buyer in respect of the defective seeds or plants and this shall be the limit of our obligation.
2. We hereby exclude all liability for any loss or damage arising from the use of any seeds or plants supplied by us and for any consequential loss or damage arising out of such use or any failure in the performance of or any defect in any seeds or plants supplied by us or for any other loss or damage whatsoever save for, at our option, liability for any such replacement or refund as aforesaid.
3. In accordance with the established custom of the seed trade any express or implied condition, statement or warranty, statutory or otherwise, not stated in these conditions is hereby excluded."
I will refer to the whole as "the relevant condition" and to the parts as "clauses 1, 2, and 3" of the relevant condition.
The first issue is whether the relevant condition, on its true construction in the context of the contract as a whole, is effective to limit the appellants' liability to a refund of £201.60, the price of the seeds ("the common law issue"). The second issue is whether, if the common law issue is decided in the appellants' favour, they should nevertheless be precluded from reliance on this limitation of liability pursuant to the provisions of the modified section 55 of the Sale of Goods Act 1979 which is set out in paragraph 11 of Schedule I to the Act and which applies to contracts made between 18 May 1973 and 1 February 1978 ("the statutory issue").
The learned trial judge, Parker J., on the basis of evidence that the seeds supplied were incapable of producing a commercially saleable crop, decided the common law issue against the appellants on the ground that "what was supplied … was in no commercial sense vegetable seed at all" but was "the delivery of something wholly different in kind from that which was ordered and which the defendants had agreed to supply." He accordingly found it unnecessary to decide the statutory issue, but helpfully made some important findings of fact, which are very relevant if that issue falls to be decided. He gave judgment in favour of the respondents for £61,513.78 damages and £30,756·00 interest. Nothing now turns on these figures, but it is perhaps significant to point out that the damages awarded do not represent merely "loss of anticipated profit", as was erroneously suggested in the appellants' printed case. The figure includes, as Mr. Waller very properly accepted, all the costs incurred by the respondents in the cultivation of the worthless crop as well as the profit they would have expected to make from a successful crop if the proper seeds had been supplied.
In the Court of Appeal, the common law issue was decided in favour of the appellants by Lord Denning M.R., who said: "On the natural interpretation, I think the condition is sufficient to limit the seed merchants to a refund of the price paid or replacement of the seeds." Oliver L.J. decided the common law issue against the appellants primarily on a ground akin to that of Parker J., albeit somewhat differently expressed. Fastening on the words "agreed to be sold" in clause 1 of the relevant condition, he held that the clause could not be construed to mean "in the event of the seeds sold or agreed to be sold by us not being the seeds agreed to be sold by us." Clause 2 of the relevant condition he held to be "merely a supplement" to clause 1. He thus arrived at the conclusion that the appellants had only succeeded in limiting their liability arising from the supply of seeds which were correctly described as "Finney's Late Dutch Special but were defective in quality. As the seeds supplied were not Finney's Late Dutch Special", the relevant condition gave them no protection. Kerr L.J., in whose reasoning Oliver L.J. also concurred, decided the common law issue against the appellants on the ground that the relevant condition was ineffective to limit the appellants' liability for a breach of contract which could not have occurred without negligence on the appellants' part, and that the supply of the wrong variety of seeds was such a breach.
The Court of Appeal, however, were unanimous in deciding the statutory issue against the appellants.
In his judgment, Lord Denning M.R. traces, in his uniquely colourful and graphic style, the history of the courts' approach to contractual clauses excluding or limiting liability, culminating in the intervention of the legislature, first, by the Supply of Goods (Implied Terms) Act 1973, secondly, by the Unfair Contract Terms Act 1977....
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