Albright & Wilson UK Limited v Biachem Limited and others Albright & Wilson UK Limited v Biachem Limited and others (conjoined appeals)

A single delivery cannot constitute performance or purported performance of two separate contracts for different goods merely because the carrier, acting for both suppliers on different consignments, attaches one supplier’s delivery note to the other supplier’s goods.

The transaction must be characterised objectively by identifying the contract whose primary obligation was being performed. Under a contract for the sale and delivery of chemicals, delivery of the chemical is the substance of performance. Supplying accurate documentation is ancillary. A delivery of the chemical ordered under one contract therefore performs, or purports to perform, that contract, although an incorrect delivery note makes that performance defective.

Albright & Wilson ordered sodium chlorite from Berk and epichlorohydrin from Biachem for delivery to different plants at the same works on the same day. Both suppliers used Huktra and its subcontractor. Through a documentation error, the tanker carrying Berk’s sodium chlorite arrived with Biachem’s delivery note for epichlorohydrin. The sodium chlorite was discharged into stored epichlorohydrin, causing an explosion.

Albright & Wilson sued both suppliers solely in contract. Eady J held on preliminary issues that both contracts had been breached. The Court of Appeal dismissed both suppliers’ appeals: [2001] 2 All ER (Comm) 537.

The conjoined appeals concerned whether the delivery constituted performance or purported performance of Berk’s contract, Biachem’s contract, or both contracts.

1. Biachem’s appeal was allowed and Berk’s appeal was dismissed. Lord Hutton and Lord Rodger expressly reached both conclusions. Lord Nicholls, Lord Slynn and Lord Hoffmann also concluded that the delivery was performance or purported performance of Berk’s contract and that Biachem’s appeal should be allowed.

2. Per Lord Hoffmann, a single act could not simultaneously be proper performance of part of one contract and improper performance of the corresponding part of a different contract. Lord Hutton and Lord Rodger likewise rejected the Court of Appeal’s analysis that the single tanker delivery purported to perform both suppliers’ separate obligations.

3. Per Lord Hoffmann and Lord Hutton, the transaction had to be characterised by distinguishing the substance of the sale contract from its ancillary elements. The primary obligation was to deliver the specified chemical. The obligation to provide an accurate delivery note was subsidiary. Since the tanker contained the sodium chlorite which Berk had contracted to supply, the delivery was made pursuant to Berk’s contract. The incorrect Biachem delivery note rendered Berk’s performance defective but did not convert the event into performance of Biachem’s contract.

4. Per Lord Nicholls, the carrier’s act should, so far as possible, be attributed to the principal whose obligation the act performed. Huktra delivered Berk’s goods on Berk’s behalf. As suitable documentation authenticated and identified those goods, Huktra’s provision of the wrong note was also attributable to Berk’s performance and placed Berk in breach.

5. Per Lord Slynn, the case turned on the proper analysis of the facts rather than agency or estoppel. Lord Hoffmann and Lord Rodger similarly held that the recipient’s appearance-based understanding did not determine whose contract was being performed where no issue of ostensible authority or estoppel arose. Lord Hutton considered the objective intention and actions disclosed by the delivery instructions. Those materials showed an intended delivery of the sodium chlorite tanker.

6. Per Lord Rodger, the fact that Huktra made the documentation error while working on Biachem’s transport arrangements did not alter the character of the later delivery. At the relevant time the driver was carrying out the instructions relating to Berk’s sodium chlorite. The preliminary question was therefore answered by holding that the events constituted performance or purported performance of Berk’s contract alone.

1. House of Lords: By [2002] UKHL 37, allowed Biachem’s appeal and dismissed Berk’s appeal. The delivery constituted performance or purported performance of Berk’s contract alone.
2. Court of Appeal: By [2001] 2 All ER (Comm) 537, dismissed both suppliers’ appeals and upheld the conclusion that both contracts were performed or purportedly performed.
3. High Court: Eady J determined preliminary issues by holding that delivery of the sodium chlorite with Biachem’s delivery note constituted a breach of contract by both Biachem and Berk.