Business Law

The issues here are whether the limitation clause should be interpreted to cover the seeds actually sold, given that the seeds were wholly defective and did not do a seed’s job at all and whether the limitation was reasonable.

Under the unfair contract terms act 1977: contract for the sale of goods, certain terms are implied into the contract that offer a level of certainty and security for the goods contracted. In this case, there are 2 possible ways the term was incorporated - by notice or by course of dealing and by custom. It is difficult to conclude whether the express term was incorporated into the contract by notice due to insufficient facts. Notice must be given at of before the time of the contract. Suppose the contract was already formed for supplying seeds for several years and the invoice with the term only came after, the term is unlikely to be incorporated.

In the case of George Mitchell v Finney Lock Seeds (1983), where the court held that the exemption clause in the contract was unreasonable because among other things, the buyer could not discover the breach until the plants grew whereas the seller with greater knowledge was at all times in a position where it should have known whether the seed was supplied incorrectly.

In the fact of our current case, the parties have been dealing with each other for years and assuming, that the term on the invoice has been the same throughout all the transactions, there is consistency and regularity. Thus parties would have a common understanding that the term has been incorporated into their contract. The term was a fair one under UCTA s2(2) which are subjected to s11 (reasonableness). The term is likely to fail the reasonableness test as compliance with the term is not practical and unreasonable. If the seeds were poisonous and caused huge loss of business, it is not practical for the seed sellers to escape liability just by repaying the purchase price or replace the seeds.

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