''New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd.'', or ''The Eurymedon'' () is a leading case on

contract law A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

by the

Judicial Committee of the Privy Council The Judicial Committee of the Privy Council (JCPC) is the highest court of appeal for the Crown Dependencies, the British Overseas Territories, some Commonwealth countries and a few institutions in the United Kingdom. Established on 14 Augus ...

. This 1974 case establishes the conditions when a third party may seek the protection of an

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. In addition to numerous common law rules limi ...

in a contract between two parties.

Facts

drilling machine A drill is a tool used for making round holes or driving fasteners. It is fitted with a bit, either a drill or driverchuck. Hand-operated types are dramatically decreasing in popularity and cordless battery-powered ones proliferating due to i ...

was to be shipped from

Liverpool Liverpool is a city and metropolitan borough in Merseyside, England. With a population of in 2019, it is the 10th largest English district by population and its metropolitan area is the fifth largest in the United Kingdom, with a popul ...

Wellington, New Zealand Wellington ( mi, Te Whanganui-a-Tara or ) is the capital city of New Zealand. It is located at the south-western tip of the North Island, between Cook Strait and the Remutaka Range. Wellington is the second-largest city in New Zealand by metr ...

. The

bill of lading A bill of lading () (sometimes abbreviated as B/L or BOL) is a document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment. Although the term historically related only to carriage by sea, a bill of lading may toda ...

stipulated the

limited liability Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...

of the carrier. It further stated that the clause would extend to servants, agents, and any independent contractors, which is often referred to as a "

Himalaya clause A Himalaya clause is a contractual 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 rel ...

". The carrier company was a subsidiary of the company that also owned the

stevedore A stevedore (), also called a longshoreman, a docker or a dockworker, is a waterfront manual laborer who is involved in loading and unloading ships, trucks, trains or airplanes. After the shipping container revolution of the 1960s, the number o ...

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.

Judgement

This case had facts on all fours with the earlier

House of Lords The House of Lords, also known as the House of Peers, is the Bicameralism, upper house of the Parliament of the United Kingdom. Membership is by Life peer, appointment, Hereditary peer, heredity or Lords Spiritual, official function. Like the ...

' case, ''

Scruttons Ltd v Midland Silicones Ltd is a leading House of Lords case on privity of contract. It was a test case in which it was sought to establish a basis upon which stevedores could claim the protection of exceptions and limitations contained in a bill of lading contract to whi ...

'', where their lordships held that the doctrine of

privity Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty. It is an important concept in contract law. Contract law {{main article, Privity of contract The ...

prevented the stevedore from relying on a limitation of liability clause in a bill of lading. However, in that case Lord Reid proposed that in future such stevedores might be covered under the contractual clause through agency provided certain pre-conditions were satisfied: In this case, the Privy Council considered that all four aspects of the "Lord Reid test" had been met, so that the stevedores were fully protected under the damage exclusion clause. Also, it used the concept of implied agency to give effect to the exemption (

Himalaya The Himalayas, or Himalaya (; ; ), is a mountain range in Asia, separating the plains of the Indian subcontinent from the Tibetan Plateau. The range has some of the planet's highest peaks, including the very highest, Mount Everest. Over 100 ...

) clause (thus extending it from the carriers to the stevedores) using the carriers as the agent. Although the contract of carriage (as evidenced by the bill of lading) was bilateral, the bill of lading operated as a unilateral contract between the shippers and the

stevedores A stevedore (), also called a longshoreman, a docker or a dockworker, is a waterfront manual laborer who is involved in loading and unloading ships, trucks, trains or airplanes. After the shipping container revolution of the 1960s, the number o ...

; and this unilateral contract was activated by performance (unloading of the drill), and the stevedore was then entitled to rely upon the protections within the bill of lading.Jill Poole, ''Contract Law'' (11th ed.), p. 130/1

Lord Wilberforce Richard Orme Wilberforce, Baron Wilberforce, (11 March 1907 – 15 February 2003) was a British judge. He was a Lord of Appeal in Ordinary from 1964 to 1982. Early life and career Born in Jalandhar, India, Richard Wilberforce was the son of S ...

stated: He went on to say:

Facts

Judgement

See also