Linpac Plastics Ltd v Europlast H Mudder GmbH

Where parties operate under a continuing distribution agreement, a later change allowing the distributor’s customer to send orders directly to the manufacturer does not, without evidence of termination or fundamental re-writing, create separate contracts between manufacturer and customer. The court should construe the ordering arrangements in the context of the existing commercial relationship. If the revised procedure is administrative convenience, the original seller–purchaser relationship remains. A formal agency analysis is unnecessary. Subsequent acknowledgements of liability may be relevant evidence of an intention to enter and remain in the contractual relationship, although they are not decisive. Standard conditions governing when the seller becomes bound must be read consistently with the wider agreement.

Linpac Plastics Ltd supplied clingfilm to Europlast H Mudder GmbH under a sole distribution agreement. Following a tripartite variation, Eurofilm placed orders directly with Linpac, while Europlast remained involved in the transaction and continued its onward-selling arrangements. A dispute arose over orders 17–26, for which Europlast had acknowledged liability but had not paid.

On 19 June 2001, His Honour Judge Hedley QC, sitting as a Deputy High Court Judge, held Europlast liable for the unpaid price. Europlast appealed, arguing that the direct orders created contracts between Linpac and Eurofilm and that no agency case had been pleaded or proved. The central issue was whether the revised ordering procedure replaced the distribution agreement or merely altered its administrative operation.

Disposition

The appeal was dismissed. The order requiring Europlast to pay the unpaid price was upheld.

1. Continuing contractual framework. Harrison J held that the original sole distribution agreement remained in force. There was no evidence of termination or of an intention fundamentally to rewrite it. The parties’ conduct, including Europlast’s continued involvement, the customs invoices identifying it as seller to Eurofilm, and its payment for earlier orders under the revised procedure, supported that conclusion.
2. Effect of direct orders. The April 1998 variation changed the method by which orders were communicated. Eurofilm’s direct orders were an administrative short-cut and notification of the goods to be supplied under the existing agreement. They did not create separate contracts between Linpac and Eurofilm. Linpac and Europlast remained the seller and purchaser respectively.
3. Agency. No formal finding that Eurofilm acted as Europlast’s agent was necessary. The court had only to determine the contractual relationship arising from the distribution agreement as varied.
4. Acknowledgements of liability. Repeated acknowledgements by Europlast were relevant evidence of both the original contractual intention and the intention to remain bound, although they were not decisive by themselves.
5. Additional analysis. Chadwick LJ agreed with Harrison J and added that the commercial arrangement preserved two bilateral contracts. He considered that the standard condition making Linpac bound only upon accepting an order had to be read in the context of the distribution agreement. On that analysis, Linpac became responsible when it acknowledged the order, while Europlast became liable on receipt of the acknowledgement unless it disclaimed responsibility before delivery.

Europlast was ordered to pay Linpac’s costs of the appeal and the Respondent’s Notice, with an interim payment of £10,000 within 14 days.

1. Court of Appeal (Civil Division): Dismissed Europlast’s appeal and upheld the judgment below.
2. Queen’s Bench Division: On 19 June 2001, His Honour Judge Hedley QC, sitting as a Deputy High Court Judge, gave judgment for Linpac for US $434,274.59 plus interest.