CONSTITUTIONAL COURT UPHOLDS SAAFF EXEMPTION CLAUSE EXCLUDING LIABILITY FOR EMPLOYEE'S THEFT
The Constitutional Court in the case of Fujitsu Services Core (Pty) Ltd v Schenker South Africa (Pty) Ltd has upheld a decision by the Supreme Court of Appeal to allow an exemption clause that excludes the liability for intentional misconduct – in this case where their employees stole the other party’s goods.
The appellant, Fujitsu contracted with Schenker to collect, clear and carry goods and deliver them to Fujitsu. This agreement was governed by the South African Association of Freight Forwarders (“SAAFF”) terms and conditions. During 2012 Fujitsu instructed Schenker to collect a consignment of laptops and accessories for them from OR Tambo International Airport. Schenker’s employee who was instructed to collect the laptops proceeded to steal them. Fujitsu tried to hold Schenker vicariously liable for the theft of the laptops, however, Schenker disputed their liability by relying on clause 17 of the SAAFF terms and conditions which stated that “Except under special arrangements previously made in writing [Schenker] will not accept or deal with bullion, coin, precious stones, jewellery, valuables, antiques, pictures, human remains, livestock or plants. Should [Fujitsu] nevertheless deliver such goods to [Schenker] or cause [Schenker] to handle or deal with any such goods otherwise than under special arrangements previously made in writing [Schenker] shall incur no liability in respect of its negligent acts or omissions in respect of such goods. A claim, if any, against [Schenker] in respect of the goods referred to in this clause 17 shall be governed by the provisions of clauses 40 and 41.”
The court found in favour of Schenker in a split decision. Five judges held that Schenker should not be entitled to rely on the limitation as to do so offended the Rule of Law. However, the majority (six judges) held that this type of clause is not unfair, since if Fujitsu had made prior special arrangements with Schenker, it would have allowed Schenker to have protected itself from liability by taking out an insurance policy to cover the risk and pass on the cost to the customer by way of a higher fee.
The court also confirmed the principle set out in Barkhuizen v Napier (that contracts that have been voluntarily and freely concluded should, as a general rule, be enforced unless there is something contrary to public policy about them.
Fujitsu had not shown that they were in a weaker bargaining position to Schenker, nor why they could not have complied with the terms of clause 17 that required them to make prior special arrangements.
It held that in these circumstances this type of clause was not against public policy.
The implication of this decision is that if a party wants to protect themselves in a situation where there is this type of clause in an agreement, they need to (1) ensure that the limitation in respect of intentional misconduct is struck out of the agreement, or (2) request that the party dealing with the goods on their behalf take out insurance to cover the goods against theft and the like, or (3) itself accept the risk and place suitable insurance to cover the goods against theft.
If they do not, and the goods are lost or stolen, even as a result of the intentional conduct of the freight forwarder’s employees, they will not have any recourse against the freight forwarder and will have to the bear the loss.