Lloyd's Maritime and Commercial Law Quarterly
SUB-BAILMENT ON TERMS: A NEW LANDMARK
The Pioneer Container
If A employs a contractor B, who in turn subcontracts to C, the position of the subcontractor C if sued by A is clearly invidious: in general, the doctrine of privity of contract prevents him from relying on contractual defences. Recognizing the injustice of this, in well-known cases such as The Eurymedon
1 the courts have attempted to allow C to rely on the terms of the main contract between A and B. The better solution, however, would seem to be to allow C to rely on the terms of his own contract with B, the terms on which he agreed to undertake the subcontracted work. In the context of sub-bailments, that possibility has indeed been recognized since the landmark case of Morris v. C. W. Martin & Sons Ltd.2 However, the extent of this exception to the doctrine of privity, and indeed its very rationale, has been a matter of doubt and debate. In The Captain Gregos (No. 2)
3 Bingham, L.J., called for an authoritative review of this area, and this has now been provided in the new landmark case, The Pioneer Container,4 in which the Privy Council has resolved many of the doubts and has established clear conceptual foundations for the law of sub-bailment on terms. The resonances of this case go beyond the law of sub
1. New Zealand Shipping Co. Ltd. v. A. M. Satterthwaite & Co. Ltd. (The Eurymedon) [1975] A.C. 154.
2. [1966] 1 Q.B. 716.
3. Compania Portorafti Commerciale S.A. v. Ultramar Panama Inc. (The Captain Gregos) (No. 2)
[1990] 2 Lloyd’s Rep. 395, 405.
4. The Owners of Cargo Lately on Board the Vessel K. H. Enterprise v. The Owners of the Vessel Pioneer Container (The Pioneer Container) [1994] 2 A.C. 324; [1994] 1 Lloyd’s Rep. 593. For a discussion of the decision of the Court of Appeal of Hong Kong in this case, see W. Swadling, “Sub-bailment on terms” [1993] LMCLQ 10.
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