Proudly sponsored by Leppard and Webber Wentzel in alliance with Linklaters, the event offered attendees a dynamic learning experience that combined legal insight with practical guidance for insurance and legal professionals.
A real case with high stakes: Fujitsu v Schenker
Caroline Theodosiou and the Webber Wentzel insurance team led the audience through a mock trial based on the Constitutional Court judgment in Fujitsu Services Core (Pty) Limited v Schenker South Africa (Pty) Limited [2023] JOL 59836 (CC).
This case involved Fujitsu, an importer, seller and distributor of laptops, computers and accessories, and Schenker South Africa, a warehouse operator and freight forwarder. The dispute arose when Fujitsu purchased and imported a consignment of laptops from Germany and engaged Schenker’s services for logistics and freight forwarding. A Schenker employee, acting as a drawing clerk responsible for collecting cargo, collected the laptops from O.R. Tambo International Airport in an unmarked hired truck. He disappeared with the goods and never returned, effectively stealing the consignment.
“This judgment, which is quite recent and was delivered by the Constitutional Court, grapples with various interesting topics, namely: (i) vicarious liability; (ii) interpretation of limitation of liability provisions; and (iii) public policy,” explained Theodosiou. “This topic is important in an insurance context because insured entities may want to safeguard themselves by taking out insurance which covers them in the event of employee theft or fraud.”
The mock trial explored whether Schenker was vicariously liable for the theft, whether its limitation of liability provision applied, and whether such a clause was against public policy.
“Ordinarily, the terms of a contract are given effect to unless they are ambiguous,” said Theodosiou. “Limitation of liability provisions (i.e. exemption clauses) are interpreted restrictively. If a party wishes to contract out of liability, it must do so in clear and unequivocal terms.”
Schenker argued that the clause covered employee theft, while Fujitsu argued it excluded intentional misconduct. Fujitsu also claimed that enforcing the provision would allow Schenker to benefit from its employee’s wrongdoing.
“Public policy represents the legal convictions of the community and those values that are held most dear by society,” said Theodosiou. “Public policy is rooted in our Constitution and the fundamental values it enshrines… Ultimately, the court found that the provision was not contrary to public policy and that it was, in fact, very fair to both parties. As such, the terms of the agreement were upheld and Schenker escaped liability.”
Balancing contractual freedom with constitutional values
The case underscored the tension between protecting businesses through contracts and upholding constitutional principles. “It has been found that public policy, as informed by the Constitution, requires, in general, that parties should comply with contractual obligations that have been freely and voluntarily undertaken. This gives effect to the central constitutional values of freedom and dignity,” Theodosiou explained.
“A court will have regard to whether the terms are contrary to public policy, considering the relative situation of the contracting parties (e.g. is there unequal bargaining power),” she added. “In this case, the court found that the provision was fair and ought to be upheld. However, this will be determined on a case-by-case basis, having regard to all the facts and the relationship between the parties.”
Theodosiou emphasised that clear, well-drafted limitation of liability provisions are crucial. “The limitation of liability provision must be clear and unambiguous. Accordingly, the conduct which the employer intends to exclude must be expressly excluded,” she said.
Practical lessons for insurers and legal professionals
The CPD session offered actionable guidance for businesses looking to safeguard themselves against insider theft. From Schenker’s perspective, companies should:
• Include a limitation of liability provision in all agreements with clients.
• Take out liability insurance covering employee theft of third-party goods and ensure compliance with policy conditions.
• Implement internal controls such as two-factor authentication for payments, segregation of duties, and robust oversight.
Fujitsu, on the other hand, could have reduced losses by complying with contractual requirements and securing insurance that specifically covered theft.
For those drafting standard terms today, Theodosiou recommended clarity and precision: “I would advise the company to ensure that the terms were drafted clearly, concisely and in plain and simple language. The standard terms need to be scrutinised to ensure that they are not ambiguous or open to multiple interpretations… Further, a court is more likely to uphold a limitation of liability provision when the limitation of liability is only triggered in certain circumstances (e.g. when the goods exceed a certain value, etc.).”
The mock trial closed with three key takeaways:
• “An employer may be vicariously liable for the conduct of its employees if there is a sufficiently close connection between the business of the employer and the conduct of the employee.”
• “Properly drafted limitations of liability provisions are enforceable and do not offend constitutional principles, provided they are clear and fair.”
• “Both parties can mitigate their risk by ensuring that they obtain appropriate insurance cover.”
This highly interactive GWII session successfully merged legal analysis with real-world business application, demonstrating how law, contracts, and risk management converge in the insurance sector.
