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Clarke v Dunraven (The Satanita)

Clarke v The Earl of Dunraven and Mount-Earl (The "Satanita")
[1897] AC 59

Overview

Two yachts were entered into a yacht race with each owner (Clarke and Lord Dunraven respectively) agreeing to be bound by rules of the Yacht Racing Association. The rules provided that any yacht that disobeyed the rules would be liable for damages resulting from the breach. One of the yachts, when breaching a rule of the Association, collided with another yacht and sank that yacht.

A question arose as to whether there was a contract between the owners to adhere to the Association rules.

The Court held that there was a contract with the result that one owner could sue the other in the event of a breach of the Association rules.

Facts

ShipClarke and the Lord Dunravan (the Earl of Dunraven) entered yacht race pursuant to Yacht Racing Association rules which provided that if a yacht was damaged as a result of negligence, the negligent party must pay damages. Specifically, rule 24 which provided:

Rule 24: "... If a yacht, in consequence of her neglect of any of these rules, shall foul another yacht, or compel other yachts to foul, she shall forfeit all claim to the prize, and shall pay all damages."

Rule 32: "Any yacht disobeying or infringing any of these rules, which shall apply to all yachts whether sailing in the same or different races, shall be disqualified from receiving any prize she would otherwise have won, and her owner shall be liable for all damages arising therefrom."

Lord Dunraven’s yacht (the Valkyrie II) was damaged by Clarke's yacht (the Satanita) as a result of the latter's negligence (the collision also killed a crew member). 

Issue

Was there a contract between the owners that incorporated the Yacht Racing Association rules?

Judgment

By entering the race on the Yacht Racing Association terms the competitors entered into a contract with each other on those terms. Dunraven had to pay!

Lord Halsbury LC

AFter observing that the persons who drew up the terms of the agreement were different from the competitors (now before the Court), his Lordship observed:

[page 62] ... I think it cannot be doubted that the substance of it is that the persons who are going to race agree to race upon these terms with each other.

That being so, the whole question turns upon what is the contract. ...

Now, apart form any other consideration, looking to the fact that part of the contract is that disobedience of the rules shall make the party who is guilty of the disobedience liable to [page 63] damages - "all damages" - if I am to assume that the parties must have known what the condition of the law was in reference to ordinary merchant ships, I think the balance is in favour of those who contend that it would have been proper and appropriate, if they had intended to have that limitation of liability, to put some words int he contract to place it beyond doubt. ... the true intention of the parties (which, after all, is the thing we have to look at) is to be found in the language they have used ... the intention of the contract is that ... all damages are to be paid by the person disobeying the rules.

Lord Herschell

Agreed with Lord Halsbury LC.

[page 63] 'I cannot entertain any doubt that there was a contractual relation between the parties to this litigation. The effect of their entering for the race, and undertaking to be bound by these rules to the knowledge of each other, is sufficient, I think, where those rules indicate a liability on the part of the one to the other, to create a contractual obligation to discharge that liability.

Lord Macnaghten

Was of the 'same opinion'.

Lord Shand

Concurred

Lord Davey

Concurred

Yachts racing