Albright & Wilson UK Ltd v Biachem Ltd & Ors

Contractual liability may arise where conduct objectively constitutes actual or purported performance, even though the wrong goods, documents or delivery location are involved. A single delivery may amount to purported performance of two contracts where the intermediary acted for both contracting parties. The analysis is objective and is made in the light of the existing contractual obligations.

Documents identifying goods may constitute an implied contractual term distinct from terms as to quality or fitness. Misleading documentation may also contribute to breach of statutory terms concerning quality and fitness. Contractual liability is strict, so contributory negligence ordinarily cannot defeat the contractual claim.

Whether contractual conditions were incorporated is assessed by asking what a reasonable person in the recipient’s position would understand from the parties’ dealings.

Albright & Wilson supplied chemicals at its Avonmouth works. Through errors by the common carrier, sodium chlorite ordered from Berk was delivered with Biachem’s delivery note identifying it as epichlorohydrin. The chemicals reacted and caused an explosion.

On preliminary issues, Mr Justice Eady held that the events constituted performance or purported performance of both contracts, that both defendants were in breach in specified respects, and that Albright & Wilson’s conditions governed its contract with Biachem.

Biachem and Berk appealed. The principal questions were whether one mistaken delivery could constitute purported performance of both contracts, the consequences for the contractual and statutory terms, and which standard conditions had been incorporated.

1. Both appeals dismissed. The Court of Appeal upheld the preliminary answers given by Mr Justice Eady. Applications for permission to appeal to the House of Lords were refused.
2. The question whether there had been performance or purported performance was to be determined objectively, in the light of the pre-existing contracts and the fact that Huktra and the driver acted as agents for both Berk and Biachem. “Purported performance” was not a term of art. It covered an objective attempt to perform a contract which went wrong or failed to comply with its terms.
3. The delivery note was legally significant. It represented that the tanker contained epichlorohydrin and therefore associated the delivery with Biachem’s contract. The physical delivery of Berk’s sodium chlorite, made pursuant to Berk’s instructions, simultaneously constituted purported performance of Berk’s contract. The fact that one load could not amount to successful performance of two contracts did not prevent it from being purported performance of both.
4. Biachem was consequently in breach of the contractual terms as to description, quality and fitness. Berk was in breach of the implied term requiring documentation correctly to identify the goods. That term was not limited to an obligation to take reasonable steps. The misleading delivery note also supported breach of the statutory terms concerning quality and fitness under the Sale of Goods Act. Delivery to the wrong plant was a mis-delivery, not an absence of purported performance.
5. The complaint that Albright & Wilson should have detected the error did not affect the contractual analysis. In ordinary commercial dealings, a party may generally assume that contractual documents presented with goods are correct. Contractual liability is strict, and contributory negligence could not be deployed to avoid the contractual result. The agency issue was objectively assessed; persons dealing with an agent acting within the usual authority of the role were prima facie entitled to assume authority.
6. On incorporation of terms, the judge applied the reasonable-person test stated in Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31. Against the commercial dealings, the blanket order and repeated references to Albright & Wilson’s conditions, a reasonable person would conclude that those conditions governed.

• Court of Appeal (Civil Division): appeals from the preliminary judgment of Mr Justice Eady dated 12 April 2000 dismissed.