The issues that arise in the
regime of law applies to the set of transaction?
bears the loss of the damaged goods?
is the effect of the exemption clause in the contract?
the carriage company be held liable for negligence?
there legal recourse for Donald and which causes of action can he take in light
of the circumstances?
The regime of law applicable in the
the bill of lading contained information to the effect that the transaction
would be regulated under and pursuant to English law and further that disputes
arising out of the transaction would be governed by English law, the bill of
lading also contained a clause to the effect that all disputes arising out of
transactions to which the charter is applicable would be subject to arbitration
in Singapore subject the laws of Singapore. The issues seem to raise a question
of conflict of laws. One of the most fundamental things to note in the set of
transaction is that Axel sold the goods to Bruce, at that particular time, Axel
was in China while Bruce was in Liverpool.
While in most transaction, the place in which the contract is formed
forms the place upon which legal jurisdiction will be attributed; there is
quite a complication with regard to the present set of circumstances because of
the geographical distance and national boundaries.1 It
is trite that a contract is formed upon acceptance of a valid offer, this means
that the contract in the present case was formed when the offer was accepted
and that is the time in which Bruce, while in Liverpool signified his
acceptance. In that regard, the contract was supposed to be governed by the
laws of the place of acceptance unless the provisions like in the present case
the contract was to be governed under and pursuant to English law by the fact
that the same was indicated on the phase of bill of lading, issuance of the
bill of lading was in itself done under the charter that recognized and
indicated that the contract would be governed by the laws of Singapore. It has
been accepted under the common law that specific provisions outweigh and outdo
the general ones. If this form of
provision or assertion is to go by, the legal regime under which the present
matter is governed is the one under which the contract was formed. On the other
hand, one can argue that the issuance of the bill of lading was subject to
acceptance of the charter upon which the entire contract was based. As
indicated in the question, the bill of lading indicated a statement to the
effect that the bill of lading was issued pursuant to the provisions of the
charter which charter contained the aforementioned disputed information.
bill of lading is not a negotiable instrument hence not capable of transfer in
the form of negotiability, is however an evidence of payment, delivery of
goods, and the owner of the goods. In that regard, a bill of lading is not
containing the contract itself but only gives evidence that there was a
contract and that the contract was entered into pursuant to the information
therein contained. A bill of lading is
not therefore the instrument giving effect to the contract, it is just an
evidenciary document. A contract is entered first and concluded before a bill
of lading can be signed.3 In
that regard, the contract was entered into before the bill of lading was signed
hence the assertion that the bill of lading was issued subject to the terms and
conditions under the recognized charter cannot hold waters especially at a time
that it there is conflict of laws
between the laws applicable under the bill of lading as against eh laws
applicable at formation of the contract.4
noted that the contract was formed by the parties and the true intention of the
parties was to have the same governed by and under English law, it is logical
to conclude that the bill of lading which indicated the laws of Singapore came
later after the parties had entered into a binding agreement sanctioned by law
which agreement indicated or provided that the transaction was subject to
English law. English law was therefore the applicable law as was intended by
the parties. In many occasions, it has been held that the concept of freedom of
contract permits and gives provisions to the effect that the intent of the
parties is what needs to be upheld in a contract; the law should therefore be
designed in a way that facilitates the decision or the agreement of the
parties. In that matter, English law remains the applicable law.
Who bears the loss of the damaged
to English common law, the party who bears the risk of damage of goods is the
party with theproperty in goods. When the property of goods have been
transferred from the seller to the buyer, the buyer assumes the position and
risk is transferred from the seller to the buyer. While appreciating that the
provisions of the section 20 of the Sale of Goods Act 1979, it is fundamental
to note that theproviso indicates that risk in property passes prima facie with
the property in goods. In that regard, when the property in goods have passed
to the buyer, the buyer assumes the position of the owner hence the loss
occasioned becomes his loss.
to section 17 of the Sale of Goods Act, property in goods passes when it is
intended to pass. It therefore means that the parties can have a different
arranged time upon which the property in goods is supposed to pass other than
the time prescribed under the relevant provisions of the sale of goods Act
1979. Under section 32 of the
aforementioned Act, delivery of goods to a carrier to transmit the goods
to the buyer absolves the seller of the responsibility over the goods and
liability for losses or damage on the goods. The rationale is that the seller
has done all he possibly could to ensure that the goods are delivered to the
buyer. The aforementioned proviso also indicate that the contract of delivery
made between the seller and the carrier is actual made by the buyer and the
carrier; the seller enters into the contract as a representative of the buyer.
In that regard, the buyer becomes the owner of the goods and the sole
proprietor thereof. The seller therefore is absolved of all blames and
liability from the set of transaction since the property in goods have passed
to the buyer whether the buyer authorized it or not. From the time in which Axel delivered the
goods to the carrier, he became not party to the transaction and the carrier
assume responsibility over the goods until the same reached the buyer.
the carrier of the goods had responsility over the goods and consequently
liability for loss or damage of the goods, they were shielded by an exemption
or exclusion clause that provided that the carriers were not responsible for
damage to the goods or loss. In the
event that damage occurred to the goods, the carriers were to be excluded
from the matter and the buyer would have
to bear the loss.
is trite under English common law that for an exclusion or an exemption clause
to have effect, it must be brought to the attention of the other party to the
contract before the contract is formed.5 The act of bringing the information on the
exclusion or exemption clause must be sufficient having regard to the
circumstances of the case. In the case
of L’Estrange V Graucob 1934 2 KB 394, the plaintiff in the matter bought for her café a cigarette machine. He signed a sales agreement which was written
in very small print without reading the same. The agreement he signed had
provisions to the effect that any express or implies warranty to the goods was
excluded. The machine sold to the plaintiff failed to work as it was supposed
to. Scrutton LJ held that if the
document is one that is supposed to be signed, the party signing it is supposed
to read the information thereon contained and that it would not matter whether
he has read it or not, upon signing it, the party is bound by the terms of the
contract entered into. In the preset case, the bill of lading was signed by the
Bruce who then transferred the bill of lading to Donald. On the face of it,
Bruce was bound by the signature he appended on the face of the document and so
was Donald being the third party transferee.
question of notice and legality of notice becomes a little bit complicated when
the question of degree of notice is brought into play as was postulated by Lord
Denning in the case of Thornton V Shoe Lane Parking 1971 1 All ER 686. In this case, the plaintiff drove his car into
a car park belong or opened by the defendant and was issued with a ticked by an
automatic machine at the which was located at the entrance of the car
park. On the face of the document and in
very small print was information to the effect that the ticket was issued
subject to the conditions therein. When
the plaintiff was injured die to negligence on the part of the defendant, the
defendant was held liable notwithstanding the fact that notice has been brought
to his attention to the effect that there would be exclusion of liability. The
rationale thereof was developed by the learned Lord Denning when he made one of
the most celebrated statement to the effect that for a notice in the circumstances
to be held as validly sufficient, the same must be printed in red ink with a
red hand pointing at it or rather that the same must have something equally
startling. The reasoning of the learned judge was that when an exemption clause
has very sweeping or draconian consequences like the one in the present
discussion, the party seeking to rely on the exemption clause must have gone
out of his way and must have made it absolutely possible for the aggrieved
party to see and read the clause. In this particular case, it is not sufficient
to just see the exclusion clause, it has far reaching consequence, the party
relying on it must do something that successfully captures the attention of the
user so that the user can actually read
or go through the exclusion or exemption clause. In the present matter, there was an exclusion
clause on the receipt with draconian and sweeping effect as to exclude
liability of any nature arising from the contract of carriage. This is an
instance in which the carriage company ought to have printed the information to
that effect in in red, bold and with a red hand pointing to it or ought to have
used something equally startling. Due to the fact that they did not, Bruce was
not bound hence Donald was not bound too.
In yet another statute Unfair
Contract Terms Act 1977, the legal regime under English law outlaw terms of a
contract which are out rightly unfair and prejudicial. The terms limited under
the aforementioned act operate as an exemption to the law of freedom of
contract. From the authority of Smith V Eric Bush 1989 2 All ER 514, one can discern that terms of contract which
exclude liability whatsoever under a contract are the target terms excluded
pursuant to this statute. In the case,
the plaintiff in the case took a mortgage with some building society,
they signed an application form which they later noticed that contained an
exclusion clause to the effect that the surveyor and the building society
guaranteed that the information on the form were accurate or correct. The
report indicated that the building was in good condition and that there was no
need for essential repairs. Due to the
information contained in the report, the plaintiff was induced to purchase the
property but later the chimney collapsed. The house of Lords held that the plaintiff
could recover under the contract. In the present case, the Bruce can recover
under the Unfair Contract Act hence Donald can get a remedy for the loss.
Negligence is a tort with some essential pre-requisites
namely a duty of care, breach of the duty of care and consequential damage
resulting therefrom. Some other principles playing part under the law of
negligence include the concept of proximity in the law of negligence and the
principle of proximate cause of the action complained of.6
In the present circumstances, it is trite that the carriage company owed a duty
of care to the owner of the goods they carried.
It is also true that from the manner they packed and/or arranged the
goods taking note of the cause of the destruction, they breached the duty of
care and as a result the proprietor of the goods being Donald had loss
occasioned therefrom. The most logical
conclusion is that the carriage company was negligent as postulated in Donoghue Vs. Stephenson doctrine.
Recourse for Donald
Having regard the circumstances of the preset case,
Donald can institute a suit against the carrier. Notwithstanding the doctrine
of privity of contract, a contract for carriage under the sale of goods act is
made on behalf of the owner of the goods who is the buyer. It therefore flows
from that provision that when Bruce sold the goods to Donald but the same
remained under carriage, Bruce as a party to the carriage contract was replaced
by Donald under the doctrine of subrogation. The implication of the same is
that Donald took the place of Bruce hence can claim under the contract of
carriage entered into between the company and Bruce at a time when the goods
were still belonging to Bruce.
In the alternative, Donald can sue Bruce as
defendant and the carriage company as another defendant jointly. In that
regard, the court should look at the issues arising from the set of transaction
and apportion liability jointly and/or severally.
The other option is to sue Bruce, Bruce can then
enjoin the carriage company as a third party in the proceedings through the
third party procedure available in civil litigation under the laws of the UK.
In this regard, the suit shall be based in privity of contract between him and
Bruce. Bruce would then claim indemnity and/or contribution from the carriage
company on the premise that the company was under an obligation to take care of
the goods during the time the same was under carriage. This would be effective
after a determination has been made that the company is not shielded from
liability on the basis of the exemption or exclusion clause herein before
Richard APosner, “A theory of
negligence.” The Journal of Legal Studies 1.1 (1972): 29-96.
HughCollins, The law of contract.
Cambridge University Press, 2003.
John GreenwoodCollier, and John
Greenwood Collier. Conflict of laws.Cambridge University Press, 2001.
LaurenceKoffman and Elizabeth
Macdonald.The law of contract.Oxford University Press, 2010.
Russell JWeintraub, Commentary on
the Conflict of Laws. Foundation Pr, 2001.
1John GreenwoodCollier, and John Greenwood Collier. Conflict
of laws.Cambridge University Press, 2001.
3Russell JWeintraub, Commentary on the Conflict of Laws.
Foundation Pr, 2001.
5HughCollins, The law of contract. Cambridge
University Press, 2003.
6Richard APosner, “A theory of negligence.” The
Journal of Legal Studies 1.1 (1972): 29-96.