Privity of Contract — That Pestilential Nuisance

AuthorJohan N. Adams,Roger Brownsword
Publication Date01 September 1993
Date01 September 1993
DOIhttp://doi.org/10.1111/j.1468-2230.1993.tb01900.x
The Modem Law Review
[Vol.
56
Privity
of
Contract
-
That Pestilential Nuisance
John
N.
Adams" and Roger Brownsword""
In
London
Drugs
Ltd
v
Kuehne and
Nagel
International Ltd,'
the Supreme Court
of Canada faced the question whether, when A has a contract with
B,
it is open to
C, one of
B's
employees, to rely on the terms of the contract between A and
B
in
order to answer a negligence action brought by
A.
By holding that, in principle, it
is open to a negligent employee (C) to rely on the protective terms of his
employer's
(B's)
contract with a customer
(A),
the majority of the Court has taken
both a measured and a welcome step towards an open relaxation of the doctrine of
privity of contract
-
'that pestilential nuisance'* as La Forest
J
aptly put it. Not
only is the decision in
London
Drugs
a milestone in Canadian common law
jurisprudence, it is a development of obvious significance for the current English
debate concerning the relaxation of the privity doctrine.
London
Drugs:
The Facts
and
Decision
The facts of
London
Drugs
were as follows. Pursuant to a warehousing contract,
London Drugs delivered a transformer to Kuehne and Nagel for storage. Section
1
l(b)
of the contract provided:
The warehouseman's liability on any
one
package is limited
to
$40
unless
the
holder has
declared in writing a valuation in excess
of $40
and paid
the
additional charge specified
to
cover
warehouse liability.
Instead of making the appropriate declaration and paying the additional charge,
London Drugs included the transformer in its own all-risks insurance cover. The
transformer was unloaded safely enough. However, when London Drugs gave the
order for the transformer to be loaded up for delivery to their new factory, two of
Kuehne and Nagel's employees negligently damaged the transformer by
attempting to lift it with forklift trucks. The transformer toppled over, occasioning
damage of nearly
$34,000.
London Drugs sued
inter alios
both Kuehne and Nagel
(in contract and in negligence), and the two careless employees (in negligen~e).~
The trial judge, Trainor
J,
having found that the two employees were negligent,
and having ruled that Kuehne and Nagel's liability was limited to
$40
(in
accordance with section
1
1
(b)
of the warehousing contract), declared that the main
issue was whether the negligent employees were entitled to invoke section
1
1
(b)
to
limit their liabilit~.~ Whilst Trainor
J
had some sympathy for the employees'
submission (that they, too, should be shielded by section 1
lo>)),
he ruled that the
*Professor of Commercial Law, University of Kent.
1
[1993]
1
WWR
1.
2
ibid
at pp
60-61.
3
**Professor of Law, University of Sheffield.
London Drugs
also
sued
the manufacturers of the transformer. This part of the claim failed at trial,
however,
it
being held that the manufacturers were not negligent in manufacturing and packaging the
transformer.
(1986)
2 BCLR (2d)
181, [1986]
4
WWR
183.
4
722
0
The Modem Law Review Limited
1993

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