Himalaya clause

Last updated

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 relate to maritime matters, and exclusion clauses in bills of lading for the benefit of employees, crew, and agents, stevedores in particular.

Contents

The Himalaya case

The clause takes its name from a decision of the English Court of Appeal in the case of Adler v Dickson (The Himalaya) [1954]. [1] The claimant, Mrs Adler, was a passenger on a voyage on the SS Himalaya. At the port of Trieste, she was injured when a gangway came adrift, throwing her onto the quayside, 18 feet below. The passenger ticket contained non-responsibility clauses exempting the carrier, as follows:

Passengers and their baggage are carried at the passenger's entire risk ...

The company will not be responsible for and shall be exempt from all liability respect of any ... damage or injury whatsoever of or to the person of any passenger ... [2] [3]

Being unable to sue the steamship company in contract, Mrs Adler instead sued the master of the ship and the bosun in negligence. The defendants sought to rely on the protection of the exclusion clauses on the passenger's ticket; but Mrs Adler argued that under the doctrine of privity of contract, the defendants could not rely on the terms of a contract to which they were not party.

The Court of Appeal declared that in the carriage of passengers (as well as in the carriage of goods) the law does permit a carrier to stipulate not only for himself, but also for those whom he engaged to carry out the contract, [4] adding that the stipulation might be express or implied. On the particular facts, the court held that the defendants could not take advantage of the exception clause as the passenger ticket passed no benefit to servants or agents, neither expressly nor by implication. [5]

As a consequence of this decision, specially drafted Himalaya clauses benefiting stevedores and others began to be included in bills of lading.

As the negligent master and bosun were employees acting in the course and scope of their employment, their employer would have been vicariously liable. Although the case does not specifically discuss vicarious liability, Denning LJ stated, [6] "the steamship company say that, as good employers, they will stand behind the master and boatswain and meet any damages and costs that may be awarded against them".

Although the decision in The Himalaya is clear and unambiguous, the reasoning ( ratio decidendi) 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 agency, trust arrangements, or (with respect to goods) by the law of bailment rather than the law of contracts.[ citation needed ]

The decision is now accepted as settled law in most common law countries, having been upheld several times by the Judicial Committee of the Privy Council.[ citation needed ]

The Himalaya decision itself has been partly superseded by legislation in the United Kingdom on two fronts:

The following cases reveal how English common law has progressed since Adler v Dickson:

The United States

The decision of the English courts has been generally accepted and adopted throughout the Commonwealth. In the United States, 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 359 US 297 [1959], Lloyd’s Rep 305, is generally taken to uphold them provided (as in other legal systems) certain criteria are adhered to.

Sample Himalaya 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." [12]

Footnotes

  1. Adler v Dickson [1954] 2 LLR 267, [1955] 1 QB 158
  2. Adler v Dickson [1954] 2 LLR at page 269
  3. Note: The Unfair Contract Terms Act 1977 s. 2 makes void any contractual term seeking to limit or exempt liability for death or personal injury caused by one's negligence.
  4. Adler v Dickson [1954] 2 LLR; Denning LJ at page 270
  5. Adler v Dickson [1954] 2 LLR; Denning LJ at page 272
  6. Adler v Dickson [1954] 2 LLR; Denning LJ page 270
  7. http://www.nadr.co.uk/articles/published/CommercialLawReports/Scruttons%20v%20Midland%20Silicones%201961.pdf [ bare URL PDF ]
  8. http://www.nadr.co.uk/articles/published/CommercialLawReports/Eurymedon%201974.pdf [ bare URL PDF ]
  9. "Contract Law Casenote: Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd 1980".
  10. http://www.nadr.co.uk/articles/published/ArbLR/Starsin%202001.pdf [ bare URL PDF ]
  11. "Steamship Mutual - Bills of Lading - Owners' or Charterers'?".
  12. Eisen und Metall AG v Ceres Stevedoring Co Ltd and Canadian Overseas Shipping Ltd (The Cleveland) [1977] 1 Lloyd's Rep 665

Related Research Articles

<span class="mw-page-title-main">Privity of contract</span> Legal Principle

The doctrine of privity of contract is a common law principle which provides that a contract cannot confer rights or impose obligations upon any person who is not a party to the contract.

Fundamental breach of contract, is a controversial concept within the common law of contract. The doctrine was, in particular, nurtured by Lord Denning, Master of the Rolls from 1962 to 1982, but it did not find favour with the House of Lords.

<i>Scruttons Ltd v Midland Silicones Ltd</i> 1961 UK House of Lords legal case

Scruttons Ltd v Midland Silicones Ltd[1961] UKHL 4, [1962] AC 446 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 which they were not party. The Court outlined an exception to the privity rule, known as the Lord Reid test, through agency as it applies to sub-contractors and employees seeking protection in their employers' contract.

A charterparty is a maritime contract between a shipowner and a "charterer" for the hire of either a ship for the carriage of passengers or cargo, or a yacht for pleasure purposes.

<i>Beswick v Beswick</i>

Beswick v Beswick[1967] UKHL 2, [1968] AC 58 was a landmark English contract law case on privity of contract and specific performance. The Lords, overruling the decision of Lord Denning in the Court of Appeal, ruled that a person who was not party to a contract had no independent standing to sue to enforce it, even if the contract was clearly intended for their benefit.

<i>NZ Shipping Co Ltd v A M Satterthwaite & Co Ltd</i> 1974 decision of the Judicial Committee of the Privy Council

New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd., or The Eurymedon is a leading case on contract law by the Judicial Committee of the Privy Council. This 1974 case establishes the conditions when a third party may seek the protection of an exclusion clause in a contract between two parties.

<i>Vita Food Products Inc v Unus Shipping Co Ltd</i> JCPC decision on choice of law clauses

Vita Food Products Inc v Unus Shipping Co Ltd [1939] UKPC 7, is a leading decision of the Judicial Committee of the Privy Council on the conflict of laws. The case stands for the proposition that an express choice of law clause in a contract should be honoured as long as the agreement was bona fide and not against public policy. The case is significant in the field of contract law, as it greatly expanded the ability of parties to choose the jurisdiction of their contacts.

<i>George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd</i> 1983 British court case

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1982] EWCA Civ 5 and [1983] 2 AC 803 is a case concerning the sale of goods and exclusion clauses. It was decided under the Unfair Contract Terms Act 1977 and the Sale of Goods Act 1979.

<span class="mw-page-title-main">English contract law</span> Law of contracts in England and Wales

English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.

Affreightment is a legal term relating to shipping.

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.

<i>J Spurling Ltd v Bradshaw</i>

J Spurling Ltd v Bradshaw[1956] EWCA Civ 3 is an English contract law and English property law case on exclusion clauses and bailment. It is best known for Denning LJ's "red hand rule" comment, where he said,

I quite agree that the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.

Privity is a doctrine in English contract law that covers the relationship between parties to a contract and other parties or agents. At its most basic level, the rule is that a contract can neither give rights to, nor impose obligations on, anyone who is not a party to the original agreement, i.e. a "third party". Historically, third parties could enforce the terms of a contract, as evidenced in Provender v Wood, but the law changed in a series of cases in the 19th and early 20th centuries, the most well known of which are Tweddle v Atkinson in 1861 and Dunlop Pneumatic Tyre v Selfridge and Co Ltd in 1915.

<span class="mw-page-title-main">Contracts (Rights of Third Parties) Act 1999</span> United Kingdom legislation

The Contracts Act 1999 is an Act of the Parliament of the United Kingdom that significantly reformed the common law doctrine of privity and "thereby [removed] one of the most universally disliked and criticised blots on the legal landscape". The second rule of the doctrine of privity, that a third party could not enforce a contract for which he had not provided consideration, had been widely criticised by lawyers, academics and members of the judiciary. Proposals for reform via an act of Parliament were first made in 1937 by the Law Revision Committee in their Sixth Interim Report. No further action was taken by the government until the 1990s, when the Law Commission proposed a new draft bill in 1991, and presented their final report in 1996. The bill was introduced to the House of Lords in December 1998, and moved to the House of Commons on 14 June 1999. It received royal assent on 11 November 1999, coming into force immediately as the Contracts Act 1999.

<span class="mw-page-title-main">Deviation (law)</span>

The doctrine of deviation is a particular aspect of contracts of carriage of goods by sea. A deviation is a departure from the "agreed route" or the "usual route", and it can amount to a serious breach of contract.

<span class="mw-page-title-main">Bill of lading</span> Document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment

A bill of lading is a document issued by a carrier to acknowledge receipt of cargo for shipment. Although the term historically related only to carriage by sea, a bill of lading may today be used for any type of carriage of goods. Bills of lading are one of three crucial documents used in international trade to ensure that exporters receive payment and importers receive the merchandise. The other two documents are a policy of insurance and an invoice. Whereas a bill of lading is negotiable, both a policy and an invoice are assignable. In international trade outside the United States, bills of lading are distinct from waybills in that the latter are not transferable and do not confer title. Nevertheless, the UK Carriage of Goods by Sea Act 1992 grants "all rights of suit under the contract of carriage" to the lawful holder of a bill of lading, or to the consignee under a sea waybill or a ship's delivery order.

Norfolk Southern Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (2004), was a United States Supreme Court case that dealt with the extent to which maritime bills of lading cover non-maritime portions of a shipment, together with connected clauses for exclusion of liability.

Seaworthiness is a concept that runs through maritime law in at least four contractual relationships. In a marine insurance voyage policy, the assured warrants that the vessel is seaworthy. A carrier of goods by sea owes a duty to a shipper of cargo that the vessel is seaworthy at the start of the voyage. A shipowner warrants to a charterer that the vessel under charter is seaworthy; and similarly, a shipbuilder warrants that the vessel under construction will be seaworthy.

Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd [1973] 1 QB 400 is an English contract law case, concerning the interpretation of unfair contract terms.

<span class="mw-page-title-main">Carriage of Goods by Sea Act 1971</span> United Kingdom legislation

The Carriage of Goods by Sea Act 1971 is a United Kingdom Act of Parliament. It incorporates into English Law the Hague-Visby Rules which are to be found as the Schedule to the Act. The Act does not use the term "Hague-Visby Rules" as such; instead, the Rules are referred to in that Act as the "Hague Rules As Amended".