New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd

The Eurymedon
Court	Privy Council
Citation(s)	[1974] UKPC 1, [1975] AC 154
Case opinions
Lord Reid
Keywords
Privity, consideration, third parties

New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1974] UKPC 1, or The Eurymedon, is a leading case on contract law by the Judicial Committee of the Privy Council. The council gave conditions of when a third party may seek protection of an exclusion clause in a contract between two parties.

Facts

A drilling machine was to be shipped from Liverpool to Wellington. The bill of lading stipulated the limited liability of the carrier. It further stated that the clause would extend to servants, agents, and any independent contractors. The carrier company was a subsidiary of the company that also owned the stevedore operation that unloaded the drill. Due to negligence the stevedores damaged the drill while unloading it. The stevedores claimed protection of the immunity clause in the contract between the carrier and Satterthwaite.

Advice

The Privy Council advised that the services provided by the shipper in unloading the drill was consideration for a unilateral contract agreeing to protect those who are doing the unloading. Typically an agreement to do something that a third party is already obligated to do is not valid consideration unless the promisee obtains some benefit from an enforceable agreement. However, the doctrine of agency was used to construct a unilateral contract between plaintiffs (owners of goods) and defendants (stevedores) where at first sight the only contract appeared to be between the carriers and the stevedores.

See also

• English contract law

Notes

External links

• Full text of decision from BaiLII.org