Himalaya clause
Encyclopedia
A Himalaya clause is a contract
ual provision expressed to be for the benefit of a third party who is not a party to the contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya clauses relate to marine matters, and exclusion clause
s in bills of lading
for the benefit of stevedore
s in particular.
. The claimant argued that under the normal rules of privity of contract
the defendants could not rely on the terms of a contract that they were not party to. However, the Court of Appeal declared that in the carriage of passengers as well as in the carriage of goods the law permitted a carrier to stipulate not only for himself, but also for those whom he engaged to carry out the contract. It was held as well that the stipulation might be express or implied. Ironically, on the facts before the court, it was held that the passenger ticket did not expressly or by implication benefit servants or agents and thus the defendants could not take advantage of the exception clause. However, after the decision, specially drafted Himalaya clauses benefiting stevedores and others began to be included in bills of lading.
The decision has subsequently been upheld several times by the Judicial Committee of the Privy Council
, and is now accepted as settled law in most common law
countries.
, trust arrangements
or (with respect to goods) by the law of bailment
rather than the law of contracts
.
, which has always had a more circumspect view of the rules of privity of contract, has generally been accommodating to exceptions to the principle, and the decision in Herd v Krawill 59 US 297, [1959] Lloyd’s Rep 305 is generally taken to uphold them provided (as in other legal systems) certain criteria are ahered to.
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
ual provision expressed to be for the benefit of a third party who is not a party to the contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya clauses relate to marine matters, and exclusion clause
Exclusion clause
An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract.Traditionally, the district courts have sought to limit the operation of exclusion clauses...
s in bills of lading
Bill of lading
A bill of lading is a document issued by a carrier to a shipper, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified...
for the benefit of stevedore
Stevedore
Stevedore, dockworker, docker, dock labourer, wharfie and longshoreman can have various waterfront-related meanings concerning loading and unloading ships, according to place and country....
s in particular.
Origin of the term
The clause takes its name from a decision of the English Court of Appeal in the case of Adler v Dickson (The Himalaya) [1954] 2 Lloyd's Rep 267, [1955] 1 QB 158 http://www.bailii.org/ew/cases/EWCA/Civ/1954/3.html. The claimant was a passenger on the S.S. Himalaya who had been injured when a gangway fell, throwing her onto the quayside below. The passenger ticket contained a non-responsibility clause exempting the carrier, so the claimant sued the master of the ship and the boatswainBoatswain
A boatswain , bo's'n, bos'n, or bosun is an unlicensed member of the deck department of a merchant ship. The boatswain supervises the other unlicensed members of the ship's deck department, and typically is not a watchstander, except on vessels with small crews...
. The claimant argued that under the normal rules of privity of contract
Privity of contract
The doctrine of privity in the common law of contract provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it....
the defendants could not rely on the terms of a contract that they were not party to. However, the Court of Appeal declared that in the carriage of passengers as well as in the carriage of goods the law permitted a carrier to stipulate not only for himself, but also for those whom he engaged to carry out the contract. It was held as well that the stipulation might be express or implied. Ironically, on the facts before the court, it was held that the passenger ticket did not expressly or by implication benefit servants or agents and thus the defendants could not take advantage of the exception clause. However, after the decision, specially drafted Himalaya clauses benefiting stevedores and others began to be included in bills of lading.
The decision has subsequently been upheld several times by the Judicial Committee of the Privy Council
Judicial Committee of the Privy Council
The Judicial Committee of the Privy Council is one of the highest courts in the United Kingdom. Established by the Judicial Committee Act 1833 to hear appeals formerly heard by the King in Council The Judicial Committee of the Privy Council (JCPC) is one of the highest courts in the United...
, and is now accepted as settled law in most common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
countries.
Reasoning
Although the decision in The Himalaya is clear and unambiguous, the reasoning underpinning the case is still the subject of some debate. The courts at various times have suggested that the exception to the common law rules of privity of contract may be founded upon "public policy" reasoning, the law of agencyAgency (law)
The law of agency is an area of commercial law dealing with a contractual or quasi-contractual, or non-contractual set of relationships when a person, called the agent, is authorized to act on behalf of another to create a legal relationship with a third party...
, trust arrangements
Trust law
In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another...
or (with respect to goods) by the law of bailment
Bailment
Bailment describes a legal relationship in common law where physical possession of personal property, or chattel, is transferred from one person to another person who subsequently has possession of the property...
rather than the law of contracts
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
.
The United States
The decision of the English courts has been generally accepted and adopted throughout the Commonwealth. In the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, which has always had a more circumspect view of the rules of privity of contract, has generally been accommodating to exceptions to the principle, and the decision in Herd v Krawill 59 US 297, [1959] Lloyd’s Rep 305 is generally taken to uphold them provided (as in other legal systems) certain criteria are ahered to.
Sample clause
- "It is hereby expressly agreed that no servant or agent of the carrier (including every independent contractor from time to time employed by the carrier) shall in any circumstances whatsoever be under any liability whatsoever to the shipper, consignee or owner of the goods or to any holder of this Bill of Lading for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions of this clause, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the carrier or to which the carrier is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the carrier acting as aforesaid and for the purpose of all the foregoing provisions of this clause the carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servants or agents from time to time (including independent contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to the contract in or evidenced by this Bill of Lading."