PRIVITY OF CONTRACT AND THIRD-PARTY BENEFICIARIES IN CANADIAN SHIPPING

Abstract

Himalaya clauses are provisions in contracts of carriage that limit the liability of third parties who perform the carriage. The doctrine of privity has traditionally restricted the enforcement of such clauses. However, after the Supreme Court of Canada established the “principled exception” to privity, courts permitted the enforcement of Himalaya clauses by third-party beneficiaries who were unaware of the clause at the time of performing the carriage. This Article argues that this wide enforcement of Himalaya clauses causes incoherence in Canadian contract law. Further, the Article proposes an alternative restrictive understanding of the “principled exception” based on estoppel.