Material Facts:

The claimant, George Mitchell Ltd, ordered cabbage seeds from Finney Lock Seeds, the defendant. The seeds were planted across 63 Acres of land. The seeds produced plants which were too small, could not be eaten by humans and were commercially useless. The loss to the claimant was 61,000. Upon a suit by the claimant, the defendant contended that “they supplied the seed on a printed clause by which their liability was limited to the cost of the seed, that is, 192”

Procedural History:

The trial judge awarded damages to George Mitchell Ltd worth 100,000, being the loss plus interest. Finney Lock Seeds appealed and the court of appeal dismissed the appeal. Finney Lock Seeds appealed to the House of Lords.

Issues:

1. Whether the exclusion clause effectively limited the liability of Finney Lock Seeds to the cost of the seed and excluded liability for consequential losses.

Holding:

1. That the exclusion clause could not limit the liability of Finney Lock Seeds to just the cost of the seed.

Ratio Decidendi:

The exclusion clause was deemed ineffective for failing to pass the reasonableness test. The court held that it would not be fair and reasonable to allow Finney Lock Seeds to rely on the exclusion clause because the exclusion clause was not negotiated between parties of equal power; it was customary for seed sellers to settle claims of this nature, demonstrating an acceptance by the industry that the exclusion clause was unreasonable; that the seed merchants could insure against liabilities of such nature, but same could not be said for the buyers; that the failure of seed merchants to supply cabbage seeds was so serious that it would be unfair to allow them to escape liability.