Spectra v. Hayesoak

The continuing development of bailment on terms increasingly forces consideration of its inter-relationship with contractual techniques designed to overcome the restrictions of privity of contract such as circular indemnities.1 In Spectra International Plc v. Hayesoak Ltd 2 a sub-bailee’s successful reliance on his own terms meant that an alternative line of protection through a chain of indemnities proved unnecessary. Is it safe then to jettison such clauses as excess baggage or are they best retained as a safety net in case a defence based on bailment on terms fails? This begs the question whether the type of clause considered in the case could still give the necessary protection on such failure. Although not directly discussed by the judge, the full consideration given by him to both alternatives provides a framework for possible conclusions on both questions.

The plaintiffs (Spectra), employed forwarders (Frans Maas) to effect delivery of audio equipment which had been shipped from Hong Kong and arrived in Southampton for final distribution. Spectra were aware that Frans Maas had no warehousing or haulage facilities of their own and that such activities would have to be delegated. The forwarders delegated the carriage to DRW, the bonded warehouse storing the goods after the period of carriage by sea; they, in turn, delegated the task to Hayesoak, a haulier from one of whose lorries the goods were subsequently stolen. The carriage contracts (Frans Maas – DRW – Hayesoak) were subject to RHA conditions,3 whereas the Frans Maas contract with Spectra was on BIFA conditions.4 The haulier was held able to rely on the limits of liability in the RHA conditions on the basis of a bailment on terms.5