In the case of the cold-storage agreement, a discussion regularly arises as to whose risk it is when the object given in custody is damaged. Custody is defined in the law as “the agreement whereby one party, the depositary, undertakes towards the other party, the depositor, to keep and return an object which the depositor entrusts or will entrust to him. The law then imposes various obligations on both the depositor and the custodian, one of the most important being that the custodian must exercise ‘the care of a good custodian’. In case of a breach of this obligation, there is a liability in principle for the damage caused thereby. depositories naturally take the position that this agreement is a so-called obligation of result, because the law stipulates, among other things, that the depositee is obliged “to return the object in the state in which he received it”. Case law is largely of the same opinion, but sometimes such a proposition is also rejected. Important is the answer to the question whether the depositary has exercised sufficient care.
In the nautical sphere, for example, the qualification of the contract played an important role in that of winter storage. In the past it has been argued (with success) that the contract of winter storage should not be considered a lease contract, but one of safekeeping, which entails far(r) reaching obligations for the depositary with regard to the object he has taken in custody. There are three criteria that are essential to conclude custody:
1) there must be a thing,
2) one party must entrust that matter to the other party, and
3) the other party must preserve and return the thing.
There are different views on each of these criteria.
The Supreme Court’s decision of July 10, 2015 addressed the second criterion, namely when there was entrustment of an item to another.
Agreements on sale.
In this case, after delivery, the client and the shipyard that built the motor vessel had agreed that the shipyard would sell the vessel from its port and that the shipyard would receive a commission upon sale. The parties further agreed that until the sale, the yard could use the vessel for fairs and promotional purposes and no charge would be made for this. The sale did not succeed and after the contract between the parties was terminated, the yard claimed compensation for, inter alia, storage and maintenance costs. The principal refused to pay these costs, after which proceedings followed.
Retention or not.
The yard argued that because it was a professional company that had taken the ship into its custody within the framework of the brokerage commission, it was entitled to charge for this. The principal defended itself by arguing that there was no custody because the ship was not entrusted to the yard. According to the principal the yard should then take care of the ship in the interest of the principal. Because the principal had made the ship available free of charge for exhibitions and promotional purposes (in which the shipyard had its own interest) there would therefore be no question of safe custody.
After the Court and the Court of Appeal had ruled in favor of the shipyard, the principal appealed in cassation and the Supreme Court ruled that in principle the starting point that the custody takes place in the interest of the principal is correct, but even if the interest of the custodian is also served, that does not mean that there can be no custody. The Supreme Court then considered: “This also follows from art. 7:603 paragraph 1 BW, which after all – besides the case that the use of the object by the depositary is necessary to keep or bring the object in good condition – recognizes the possibility that the principal gives permission for the use of the object by the depositary. That possibility is not subject to the restriction that the authorized use must serve only the interest of the depositor.’ The Supreme Court also refers to the rules of concurrence, on the basis of which, on a contract that meets the description of two or more contracts, the provisions given for each of those contracts may, in principle, apply to the contract in parallel (article 6:215 Dutch Civil Code). As an example the Supreme Court cited ‘a contract which meets the description of both safekeeping (with the characteristic that it takes place in the interest of the depositor) and (…) of lending (whereby the borrower may use the object in his own interest, within the limits of art. 7A:1781 BW)’.
Whether there is custody must then be judged by the Haviltex standard, which has been applied in case law for decades, weighing all the circumstances of the case and giving priority to the intention of the parties and what they could reasonably expect from each other, even if the literal text of a contract implies otherwise. In this case it was not unreasonable for the yard to charge for storage, as these costs were also incurred in the context of the contract of sale of the ship, even though the yard was also allowed to use the ship for promotional and exhibition purposes.
Conclusion: the client had to pay the invoices of the yard!