An exemption clause which has the effect of excluding a party’s liability for theft by its employees is not contrary to public policy and is enforceable. This was the ruling of the Constitutional Court in Fujitsu Services Core (Pty) Limited v Schenker South Africa (Pty) Limited [2023] ZACC 20.  This issue divided the Court, with five judges reaching the opposite view.  However, the majority view of six judges prevailed and is binding.

Fujitsu Services Co re (Pty) Ltd appointed Schenker South Africa (Pty) Ltd as its freight forwarder. The agreement between Fujitsu and Schenker incorporated the Standard Trading Terms of the South African Association of Freight Forwarders (SAAFF). Clause 17 of these terms provides that Schenker would not accept nor deal with high-value goods without special arrangements being made in writing. Should Fujitsu nevertheless deliver such high-value goods and Schenker deal with them without a special arrangement being made in writing, Schenker would incur no liability for the loss of such goods.

Laptops and accessories of highvalue were delivered by Fujitsu to Schenker without any prior special arrangements in writing having been made. An employee of Schenker stole the goods and Fujitsu had sought to recover its loss from Schenker.

Fujitsu had initial success in the High Court. However, the SCA had determined that clause 17 absolved Schenker of liability. Fujitsu raised a new point for the first time in its appeal to the Constitutional Court, namely that if clause 17 means that Schenker is exempted from liability for loss suffered by Fujitsu due to the theft of its goods by its employee, this would be contrary to public policy and should, for that reason, not be enforced. The Court accepted that this raised a Constitutional issue.

The Constitutional Court held that, while Schenker was contractually responsible for the loss caused by the theft of its employee in these circumstances, it did not itself commit the theft and enforcement of clause 17 would not be condoning the theft of the employee. Accordingly, the enforcement of the clause in these circumstances was not contrary to public policy and Schenker was not liable for the loss.

While the judgment creates a general rule, it is to be noted that the Consumer Protection Act did not apply to this agreement and different considerations would apply if it did. Furthermore, regulations pertaining to certain industries, for example the private security industry, prohibit exemption clauses which have such an effect. In addition, the courts will not uphold such an exemption clause if the theft is imputed to the defendant itself and is not merely the act of an errant employee. 

The decision provides welcome legal clarity to situations where contrary legislation does not apply.