Can the widow enforce the agreement when she was not a party to the agreement? Can she enforce specific performance?
Holding
Reasoning
Lord Reid:
The contract does not confer a right on the third person (the widow)
The widow, therefore, cannot sue in her own right, but only in her capacity as administratrix of her deceased husband’s estate.
This leads to problems because it can only give rise to damages, which were nonexistent because there was no loss to the estate as a result of the breach
The CML has been radically altered by s. 56(1) of the Law of Property Act 1925 and the section entitles to sue in her personal capacity and to recover the benefit provided for her in the agreement although she was not a party to it
Specific performance awarded because it would be unjust not to award it – there is no tangible damage, except to the widow, who has no standing to claim. This is an equitable remedy.
Ratio
Third parties cannot sue in their own name.
Comments
In suing as administratrix, she would be suing for damages, not for specific performance damages would be… what? Nothing, if the service contracted for was a service to a third party. The estate didn’t suffer any loss, so can’t claim damages.
CML - London Drugs Inc. v. Kuehne & Nagel International Ltd. [1992] 3 S.C.R. 299.
Jurisdiction
Quebec
Facts
LD delivered transformer to K&N to store. Signed agreement for storage with limitation of liability clause stating warehousemens' liability on any package limited to $40, unless pay additional charge. LD does not pay extra. 2 employees of K&N attempt to move transformer, but negligent in care. Transformer is damaged in process. LD sues alleging breach of K and negligence. Trial court held employees personally liable for damage to transformer. On appeal, employees found not liable. Appealed by LD to SCC on issue of liability of employees.
Issues
Did employees owe duty of care to LD and if so, can they avail themselves of limitation of liability clause in K between LD and K&N?
Holding
Yes and Yes K&N.
Reasoning
Q1 not discussed in casebook.
Q2: Privity of K established rule of law. Courts may not make radical changes to law, but have duty to make incremental changes to keep in line with social values. Relaxing Privity is not a major change and one courts should make in this case.
No concerns about double recovery, floodgates, reciprocity or right to vary or rescind K.
“Where an employer and a customer enter into a K for services and include a clause limiting the liability of the employer for damages arising from what will normally be conduct contemplated by the contracting parties to be preformed by the employer's employees... there is simply no valid reason for denying the benefit of the clause to employees who perform the contractual obligations.” (p. 313 CB).
Allowing liability in tort would circumvent the limitation of liability clause's purpose. SCC held in Central Trust co. v. Rafuse that this is impermissible. Allowing liability in tort despite limitation clause would effect fundamental alteration of K.
Policy reasons: Limitation of liability makes good commercial sense; encourages parties to appropriately allocate risk via insurance. Employees do not expect to be subject to unlimited liability.
Ratio
Employees can benefit from a limited liability clause in K between employer and customer where: 1) clause must expressly or impliedly extend benefit to employees seeking to rely on it and 2) employees acting in course of employment and performing very service provided for in K when loss occurs.
