Wednesday, February 20, 2013

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

New Zealand Shipping Co. Ltd. v A.M. Satterthwaite & Co. Ltd. case brief summary
[1975] AC 154, [1974] 1 All ER 1015

-Ajax Machine Tool Co. Ltd. manufactured and consigned a drill to A.M. Satterthwaite & Co. Ltd. 
-A bill of lading was issued by agents for the Federal Steam Navigation Co. Ltd. which contained a clause stating the following:
-there was no liability for the carrier or servants/agents to the consignee,
-all claims must be within one year (Carriage of Goods by Sea Act), and
-not accountable for damages in excess of £100 unless the goods were insured for that value.
-The stevedores were New Zealand Shipping (of which the Federal Steam Navigation Co. was a subsidiary) and they unloaded the drill and in the course of unloading damaged the drill due to negligence. 
-Satterthwaite brought this action three years after the damage and NZ Shipping claimed that they were not liable as they were covered by the clause in the bill of lading.

Does the limited liability clause in the bill of lading apply to the stevedores in this case?

Yes.  Appeal was allowed with costs to the appellant.  Liability clause applies.

The test for agency:
-if the party is meant to be covered by provisions;
-if the promissor is clearly acting as agent for the party; and
-if the promissor has authority to do this;

Consideration then moves from party through agent to promissee. Applying the test to this case, the court found that it is clear that there is a subsidiary relationship between the parties.

-Satterthwaite agreed to exempt carrier and agents from liability in the bill of lading and commercial realities must mean that this covers the whole carriage from loading to discharge. 
-This is essentially a "unilateral" contract which becomes bilateral with the specific performance of loading the goods. 
-These acts constituted consideration for an agreement between Satterthwaite and NZ Shipping and therefore NZ Shipping would be subject to the exemption conditions of the bill of lading. 
-Wilberforce makes it clear that this decision is in the interest of ensuring an efficient global market; the owners should have been insured since they knew the true value of the goods.

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