New Zealand Shipping v Satterthwaite, The Eurymedon [1975] AC 154

• X, a carrier, was exempted from liability by law for goods that it transported.

• It entered into a contract with Defendant (whose objects it was transporting) where it stated that any actions brought against itself or its agents were subject to a one year limitation within which the action could be brought.

• Defendant, an agent company used by Plaintiff to unload the ship damaged an object but were sued after a year by Defendant. The question was whether Plaintiff had the authority to contract for a third party.

• HL found that Defendant could take advantage of the contract. 

Lord Wilberforce

• There are 4 conditions for an agency contract to work:

  1. The contract makes it clear that the company working for X is to be protected by the limitations provisions.

  2. The contract makes it clear that X is contracting on behalf of the other company (i.e. the company working on X’s instructions).

  3. X has authority from the other company to act as agent, or perhaps later ratification by the company would suffice.

  4. Any difficulties about consideration moving from the company are overcome. In this case all conditions were satisfied.

• In this commercial context the financial interests and dealings of all 3 parties show that there must have been consideration between Plaintiff and Defendant, however the fact that Defendant was only directly dealing with Plaintiff and not Defendant (i.e. that it had a pre-existing duty to Defendant to do the work) showed how problematic the “offer and acceptance” approach could be, but did not prevent Defendant from claiming the protection of the clauses.

• This should be regarded as a unilateral contract whereby Plaintiff has offered protection from prosecution to X and all the groups it uses to carry out the carriage, including Defendant. 

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