Check the fine print!

A fascinating case – involving the employee of a logistics company – has once again returned to court. The findings of the court serve as a reminder to check the fine print before concluding any contracts, says PETER LAMB.

The Supreme Court of Appeal (SCA) in Schenker South Africa (Pty) Ltd v Fujitsu Services Core (Pty) Ltd (508/2020) [2022] ZASCA 7 (18 January 2022) has reversed the decision of the High Court in Fujitsu Services Core (Pty) Limited v Schenker South Africa (Pty) Limited (21830/2014) [2020] ZAGPJHC 111.

In this case, Fujitsu claimed damages of US$516 877, being the value of goods stolen by a Schenker employee. Schenker was responsible for the import of a consignment of laptops and other computers into South Africa from Germany on behalf of Fujitsu.

The High Court had found that Schenker’s employee was not executing the contract (clearing and freight forwarding services) when they attended to the warehouse to steal Fujitsu’s cargo, and that the theft was an act outside the performance of the agreement. The exemption clause relied on by Schenker did not apply as the parties did not contemplate that these clauses would include delictual liability arising from theft by an employee.

The exemption clauses read:

“17. GOODS REQUIRING SPECIAL ARRANGEMENTS

Except under special arrangements previously made in writing [Defendant] will not accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques, pictures, human remains, livestock or plants. Should [Claimant] nevertheless deliver such goods to [Defendant Schenker] or cause [Defendant] to handle or deal with any such goods otherwise than under special arrangements previously made in writing [Defendant] shall incur no liability whatsoever in respect of such goods, and in particular, shall incur no liability in respect of its negligent acts or omissions in respect of such goods. A claim, if any, against [Defendant] in respect of the goods referred to in this clause 17 shall be governed by the provisions of clauses 40 and 41.

40. LIMITATION OF [SCHENKER’S] LIABILITY

40.1 Subject to the provisions of clause 40.2 and clause 41, [Defendant] shall not be liable for any claim of whatsoever nature (whether in contract or in delict) and whether for damages or otherwise, howsoever arising including but without limiting the generality of the aforesaid –

40.1.1 any negligent act or omission or statement by [Defendant] or its servants, agents and nominees; and/or

40.1.3 any loss, damage or expense arising from or in any way connected with the marking, labelling, numbering, non-delivery or mis-delivery of any goods; and or

Unless –

1. a) such claim arises from a grossly negligent act or omission on the part of [Defendant] or its servants; and
2. b) such claim arises at a time when the goods in question are in the actual custody of [Defendant] and under its actual control; and

40.2 Notwithstanding anything to the contrary contained in these trading terms and conditions, [Defendant] shall not be liable for any indirect and consequential loss arising from any act or omission or statement by [Defendant], its agents, servants or nominees, whether negligent or otherwise.”

The SCA disagreed, finding that the cargo was being “handled, transported, or dealt with” by and on behalf of Schenker at the time of the theft by its employee, and therefore fell within the scope of the agreement. The SCA then held that, read contextually and having regard to the agreement as a whole, the phrases “of whatsoever nature” and “howsoever arising” should be given their ordinary literal meaning and were, in the SCA’s view, sufficiently wide in their ordinary meaning to draw into the scope of the exemption the deliberate acts (including theft) of Schenker’s employees.

The SCA gave effect to the longstanding legal principle that when parties enter into a contract, the common law will apply to that contractual relationship, unless the parties have plainly and unambiguously indicated to the contrary. Under common law, but for the agreement’s exemption clauses, Schenker would in these circumstances be liable to Fujitsu for the theft of its property.

However, the SCA held that the exemption clauses were clear and unambiguous. One wonders if Fujitsu, when entering into the contract with Schenker, really appreciated the extent of the exemption clauses? The point is that words have meaning, and although the use of standard trading terms is a commercial reality, it is recommended that a party entering into a contract fully understand its common law rights and obligations, and the extent to which the contract it seeks to enter into departs from the common law.