A cargo owner sued both the charterer and the owner of a boat whose poor condition led to damage of cargo. HL held that in fact the contracts were between the cargo owners and the charterers, NOT the ship owners, who could not therefore be liable. However the cargo owners would be able to ship owners in tort.
Lord Hoffman: a Himalaya clause protects third parties via a main contract where the party who introduces the clause on TP’s behalf does so either with TP’s permission (i.e. as agent) or the clause is ratified later on by TP’s acting upon it. It is in the act of rendering the service that TP’s contract with the contractor is formed since, until that stage, there is no consideration for the exemption from liability that the contractor is giving TP.
Lord Millett: A Himalaya clause has the effect of bringing into being a separate or collateral contract between the cargo owner and a third party, usually an independent contractor such as a stevedore, under which the third party enjoys exemption from liability to the cargo owner. They also establish that the contract is a unilateral or 'if' contract by which the third party undertakes no obligation to the cargo owner of any kind, but the cargo owner promises that if the third party does anything in the course of its employment which damages the cargo it will have the benefit of the protective provisions of the clause”.