Albright & Wilson UK Ltd v Biachem Ltd & Ors

The House of Lords considered whether a single incorrect delivery (a tanker of sodium chlorite delivered with a delivery note for epichlorohydrin) constituted performance or purported performance of one or both contracts made with the claimant. The court held that the acts of the carrier are to be characterised as acts of the principal on whose behalf the carrier was performing: the physical delivery of the chemical was the primary obligation and the delivery note was ancillary. On this basis the load delivered was treated as performance of the contract to deliver sodium chlorite (Berk's contract), and Biachem was not liable for breach of contract. The court therefore allowed Biachem's appeal and treated Berk as having been in breach by delivering goods accompanied by inaccurate documentation.

Background and facts:

• Albright & Wilson placed separate orders for two tanker-load deliveries to the same works on the same day: sodium chlorite from Berk and epichlorohydrin (EPI) from Biachem.
• Both consignments were handled by the same carrier, Huktra, which subcontracted to Stevens. Because of errors in Huktra's instructions and a "neutral delivery" arrangement, the tanker containing sodium chlorite arrived at Albright & Wilson with Biachem's delivery note stating the contents were EPI; the sodium chlorite was discharged into stored EPI and an explosion occurred.

Nature of the claim and procedural posture:

• Albright & Wilson sued Berk and Biachem in contract only, seeking damages for loss arising from the explosion and excluding tort claims to avoid contributory negligence arguments.
• Eady J at first instance held both defendants in breach on preliminary issues. The Court of Appeal ([2001] 2 All ER (Comm) 537) upheld that conclusion. The appeals were heard by the House of Lords.

Issues framed by the House of Lords:

1. Whose contract was being performed when the tanker arrived and the delivery note was handed over — Berk's, Biachem's or both?
2. How should the acts of the carrier and subcontractor be characterised for the purposes of contractual liability?

Court's reasoning:

• The majority analysed the transaction objectively and traced the contractual chain of obligations and agency. The carrier's acts were to be attributed to the principal on whose behalf the carrier was performing the relevant delivery task.
• The court treated the delivery of the physical chemical as the primary contractual obligation and the provision of correct documentation (the delivery note) as ancillary to that obligation.
• Applying these principles to the facts, the House concluded that the driver who delivered the tank was performing Berk's contract to deliver sodium chlorite, and the tendering of Biachem's delivery note was an ancillary mistake. Accordingly Biachem was not liable in contract for the physical delivery; Berk was in breach because the goods were accompanied by inaccurate documentation.

Remedy sought and result:

• Damages for breach of contract were sought. The House allowed Biachem's appeal and rejected the finding of contractual liability against Biachem; it treated the delivery as performance (or attempted performance) of Berk's contract, leaving Berk liable for the inaccuracy of documentation.

Appeal allowed in part. The House of Lords held that the physical delivery of sodium chlorite was to be characterised as performance of Berk's contract; the delivery note was ancillary and its misdescription did not convert the delivery into performance of Biachem's contract. For these reasons the appeal by Biachem was allowed and the prior finding of contractual liability against Biachem was set aside; Berk remained liable for delivering its goods accompanied by inaccurate documentation.

High Court (Eady J): preliminary issues decided that both defendants had breached their contracts. Court of Appeal: appealed and judgment dismissing appeals [2001] 2 All ER (Comm) 537. House of Lords: allowed Biachem's appeal and disallowed the finding of contractual liability against Biachem; treated the relevant delivery as performance of Berk's contract [2002] UKHL 37.