Lloyd's Maritime and Commercial Law Quarterly
THE LAW COMMISSION’S DRAFT CONTRACTS (RIGHTS OF THIRD PARTIES) BILL AND THE CARRIAGE OF GOODS BY SEA
Stephen D. Girvin*
This article considers the ramifications of the Law Commission’s proposed Contracts (Rights of Third Parties) Bill for contracts for the carriage of goods by sea.
1. Introduction
The doctrine of privity of contract, considered to be a fundamental principle of the English law of contract,1 has been criticized by the judiciary2 and academic writers, sometimes in consequence of difficulties encountered by third parties seeking to rely on contractual terms in bills of lading and charterparties.3 Sixty years ago the Law Revision Committee recommended that the privity rule ought to be revised4 but only in the past five years has the Law Commission of England and Wales returned to a consideration of the doctrine, first in a Consultation Paper5 and now in a Report.6 In its Report, the Law Commission has proposed draft legislation, the Contracts (Rights of Third Parties) Bill,7 intended to ease the plight of the third party who seeks to rely on the terms of a contract to which he
* Senior Lecturer in Law. University of Nottingham. I am grateful to Michael Bridge for his comments on a draft of this paper.
1. For detailed analysis see G. H. Treitel, The Law of Contract, 9th edn (1995) (hereafter “Treitel”), 568–573; John Adams and Roger Brownsword, Key Issues in Contract (1995), ch. 5; S. D. Girvin, “Third Party Rights under Shipping Contracts in English and South African Law” (1997) 9 S.A. Mercantile L.J. 97.
2. See Beswick v. Beswick [1968] A.C. 58, 72, per Lord Reid; The Pioneer Container [1994] 2 A.C. 324 (P.C.), 335, per Lord Goff; White v. Jones [1995] 2 A.C. 207, 262–263, per Lord Goff; The Mahkutai [1996] A. C. 650, 664–665; [1996] 2 Lloyd’s Rep. 1 (PC.), 8, per Lord Goff. See also the extrajudicial remarks by the late Lord Roskill, “Half-a-century of Commercial Law 1930–1980” (1982) 7 Holdsworth L.R. 1,6–7. Criticisms have also emanated from the High Court of Australia (Trident General Insurance Co. Ltd v. McNiece Bros Pty Ltd (1988) 165 C.L.R. 107) and the Court of Appeal of British Columbia (London Drugs Ltd v. Kuehne & Nagel International Ltd (1992) 97 D.L.R. (4th) 261).
3. See J. F. Wilson, “A flexible contract of carriage—the third dimension?” [1996] LMCLQ 187.
4. Sixth Interim Report, Statute of Frauds and the Doctrine of Consideration, (1937) Cmnd 5449, para. 48.
5. Privity of Contract: Contracts for the Benefit of Third Parties: L.C.C.P. No. 121 (1991). See J. Beatson, “Reforming the Law of Contracts for the Benefit of Third Parties: A Second Bite at the Cherry” (1992) 45 C.L.P. 1. For criticism of the Consultation Paper, see S. Degeling, “A Consideration of the UK [sic] Law Commission’s Consultation Paper, ‘Privity of Contract’” (1993) 6 J.C.L. 177. See also Adams and Brownsword, supra, fn. 1, 146–161; Treitel, 588–589.
6. Privity of Contract: Contracts for the Benefit of Third Parties. Law Com. No. 242, Cmnd 3329 (1996). See Andrew Burrows, “Reforming Privity of Contract: Law Commission Report No. 242” [1996] LMCLQ 467; Andrew Tettenborn, “Third Party Contracts—Pragmatism from the Law Commission” [1996] J.B.L. 602; F. M. B. Reynolds, “Privity of Contract”(1997) 113 L.Q.R. 53; N. H. Andrews, “Reform of the Privity Rule in English Contract Law: The Law Commission’s Report No. 242” [1997] C.L.J. 25; J. N. Adams, D. Beyleveld and R. Brownsword, “Privity of contract—the Benefits and the Burdens of Law Reform” (1997) 60 M.L.R. 238.
7. Law Com. No. 242, 174–183.
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