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New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. [1974] UKPC 1

Facts:

P stevedor. D consignee of bill of lading. Drill damaged because of P. Bill of lading said the carrier had limited liability and clause would extend to servants, agents, or independent contractors

Issue(s):

Can P, as a 3rd party, take the benefit of the time limitation provision, when they have provided no consideration under the contract?

Ratio:

The bill of lading was treated as an offer and for P to accept they just had to unload the product – independent contractors will be covered.

Typically an agreement to do something that a third party is already obligated to do is not valid consideration unless the promisee obtains some benefit from an enforceable agreement

Analysis:

A contract between 2 parties cannot be sued on by a 3rd person even though the contract is expressed to be for his benefit. – because no consideration provided.

Prerequisite of validity of contract – criteria for 3rd party to take benefit of exemption clause:
**Has to be exemption clause
**Intention to create an agency
**Authority to act as agent
**Show consideration

Can you use consideration twice? - YES. To give P the benefit of the exemptions and limitations, is to give effect to the clear intentions of a commercial document

Holding:

P is protected by limitation and exemption clause


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