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

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...

. 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

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...

 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

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....

 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.

External links

• Full text of decision from BaiLII.org