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

"New Zealand Shipping Co Ltd v. A M Satterthwaite & Co Ltd", [1975] AC 154, 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.

Background

A drilling machine was to be shipped from Liverpool to Wellington. The bill of lading stipulated that 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.

Ruling of the Council

The council held that the services provided by the shipper in unloading the drill was consideration for a unilateral contract agreeing to protect those are doing the unloading. Typically an agreement to do something that a third party is already obligated to you is not valid consideration unless the promisee obtains some benefit from an enforceable agreement. Golden Goose

External links

* [http://www.bailii.org/uk/cases/UKPC/1974/1.html Full text of decision from BaiLII.org]
* [http://www.thomson.com.au/catalogue/getFile.asp?downloadId=184 full text of decision] doc file