UPS SCS South Africa (Pty) Ltd v Hendrik Cornelis van Wyk t/a Skydive Mossel Bay

The respondent, Van Wyk, operated a skydiving business in Mossel Bay using Cessna aircraft. He sent an aircraft engine for overhaul to America's Aircraft Engines Inc in the USA in 2007. In 2012, the overhaul was completed and Van Wyk needed the engine returned to South Africa. In December 2012, he contacted the appellant UPS for transport. After email exchanges, UPS provided a quotation for sea freight from Oklahoma to George, South Africa. Van Wyk accepted this on 22 January 2013 by email stating he wanted to "go ahead". UPS then requested he complete a credit application form, stating it was required for US shipments. Van Wyk signed the form indicating payment upfront and no credit required. The engine was picked up for transport but was destroyed in a truck fire in transit within the USA on 12 June 2013. UPS initially provided Van Wyk with an insurance claim form, but later informed him the shipment was not insured and their liability was limited to US$500 according to their standard trading conditions. Van Wyk sued for R386,140.30, the cost of obtaining a replacement reconditioned engine from a South African supplier.

• Whether the standard trading conditions containing exemption clauses attached to the credit application formed part of the contract of carriage between the parties
• Whether exemption clauses were validly incorporated into the contract
• Whether the exemption clauses were brought to the customer's attention as required by the Consumer Protection Act 68 of 2008
• Whether UPS was liable for the loss of the engine during carriage
• What was the proper measure of damages for the destroyed engine

The application for leave to appeal against the whole judgment was dismissed with costs (including costs of two counsel). The appeal was dismissed with costs (including costs of two counsel). The judgment of the Western Cape High Court (Henney J) in favor of Van Wyk was upheld, ordering UPS to pay R386,140.30 with interest at 15.5% per annum from 12 June 2013, plus costs including wasted costs.

The binding legal principles established are: (1) Standard trading conditions containing exemption clauses do not form part of a contract unless they are clearly and pertinently brought to the customer's attention before or at the time of contracting; (2) Exemption clauses that undermine the very essence of a contract require particularly conspicuous notice and cannot be incorporated through barely legible fine print on reverse pages or through references that are not brought to the customer's specific attention; (3) A credit application completed for administrative purposes (such as obtaining an account number) does not necessarily incorporate all standard trading conditions into a previously concluded contract; (4) In contract law, a party is bound by its pleaded case and cannot introduce new legal arguments on appeal that were not pleaded or put to witnesses in cross-examination; (5) In contracts of carriage, the carrier remains liable for breach even when goods are in the possession of a subcontractor, as the carrier's obligation is to cause the goods to be conveyed in accordance with the contract; (6) The measure of damages for breach of a contract of carriage is the amount necessary to place the innocent party in the position they would have been in had the contract been performed, which includes the replacement value of destroyed goods.

The Court noted that it was unnecessary to deal with issues relating to the Consumer Protection Act 68 of 2008 or the National Credit Act 34 of 2005, as the matter could be decided on ordinary contract law principles. This suggests that even if those statutes applied, they would not have affected the outcome. The Court also observed that the attempt by UPS's counsel to rely on provisions in the original quotation was "opportunistic" given that this was never the pleaded case. The judgment noted that Van Wyk, as owner of a skydiving business, would not necessarily have understood complex exemption clauses without explanation, and that even experienced business persons are unlikely to understand the nature and effect of such clauses without explanation. The Court emphasized the misleading nature of the credit application's layout, which directed attention away from the important provisions referring to conditions on the reverse side.

This case is significant in South African contract law and consumer protection law for establishing important principles regarding the incorporation of exemption clauses into contracts. It reinforces that standard terms and conditions, particularly exemption clauses that undermine the essence of a contract, must be clearly and conspicuously brought to a customer's attention to form part of the contract. The case emphasizes that merely having terms in fine print or on reverse pages is insufficient. The judgment clarifies that a party cannot shift its legal position on appeal by raising arguments not pleaded or put in evidence at trial. It also provides guidance on the measure of damages in contracts of carriage, confirming that the replacement value of destroyed goods is the appropriate measure to place the innocent party in the position they would have been in had the contract been performed. The case demonstrates the courts' protective approach toward consumers and the strict requirements for valid incorporation of exemption clauses in standard form contracts.