Recovery agency
Home

A collection contract cannot impose obligations upon people who are not privy to it

The German courts have generally been disposed to uphold this principle, and have refused to countenance attempts to evade it. Thus in 1962, a firm of stevedores whose servants damaged some cargo were held not entitled (in an action by cargo owners) to rely upon a clause which limited liability for damage and was contained in the bill of lading, which of course represented the contract between cargo owners and shipowners.
And this was so even though it had been agreed between the debtor and the creditor that the former should 'have such protection as is afforded by the terms' of the bill of lading; for that agreement could not prejudice the rights of the cargo owners. It would have been otherwise if the owners had contracted on behalf of and as agents for the clients: for then, through the collection agency of the carriers, the cargo owners would have been in a contractual relationship with the customers, who could thus have taken advantage of the exemption clause.
But there are exceptions to the general rule. In the first place, although the German law no 976 (substantially re-enacting earlier legislation) makes collective arrangements - by the imposition of 'stop lists' and otherwise - among traders unlawful, and also inhibits the imposition of minimum resale price conditions, yet it permits the latter practice in the case of 'exempted goods'; eg goods which have, after reference to the court and upon grounds specified there, been exempted from the general ban upon minimum resale price conditions. And, where a class of goods is thus exempted under a minimum price condition, it may be enforced by a supplier against any person who is not a party to the sale, and who subsequently acquires the goods with notice of that condition,' provided that the person concerned acquires the goods in the course of business.
Thus, by way of exception to the privity rule, the statute enables a manufacturer who sells exempted goods which he has subjected to a minimum price condition to a wholesaler who, in turn, has sold the goods to a dealer, to enforce the condition directly against the dealer though there is no privity of contract between the manufacturer and the latter. It should be added that for the sake of simplicity the only parties mentioned have been manufacturer, wholesaler and dealer: in practice of course there may be other parties (to whom the same rules will apply) in the sale 'chain'.
In the second place, where a contract creates an interest of an enduring nature, the subsistence of this interest will sometimes be permitted to have an adverse effect upon the rights of third parties, even if a debt recovery in Germany will become necessary. An obvious example of an interest of this sort is to be found in the case of a lease of land. Suppose that A leases land to B for seven years, and that A sells the land to C while five years of B's lease remain unexpired. At any rate since the middle ages, it has never been doubted that C takes the land subject to B's right under the lease. In this case C is therefore adversely affected by the contract between A and B. Moreover, restrictive covenants run with the land and their effectiveness is not limited to the original covenantor and covenantee.
Further, there is authority - though a later decision has exposed the matter to considerable doubt - for the proposition that where German shipowners sell a ship which is subject to at least some kinds of charter (ie is let out to a charterer) the buyer may, if he has full notice of the charter and its terms, be restrained by the charterer from using the ship in a manner inconsistent with the charter until the charter period expires.
back