Natixis SA v Marex Financial & Ors

A seller under a contract for the sale of commodities bears the contractual risk that warehouse receipts supplied as required documentation are forged where the contract, properly construed, requires objectively genuine receipts. That allocation of risk leaves no room for common mistake. A warehouse receipt is not a document of title and does not create a contractual relationship between its holder and the warehouse before presentation, authentication and attornment. A warehouse undertaking to authenticate its own receipts may give rise to a duty of care in favour of the party requesting authentication, but an effective disclaimer may prevent such a duty in relation to a verification of photocopies. Liability limitations may operate as non-contractual notices where reasonable notice is given and the limitation is reasonable. Estoppel cannot create a cause of action, transfer title, or require delivery of goods belonging to third parties.

Natixis bought nickel from Marex under five conditional-repurchase transactions. Marex delivered documents purporting to be Access World warehouse receipts, and Natixis paid the purchase prices. The documents were later found to be forged. Natixis claimed damages and an indemnity from Marex for breach of the Purchase Contracts. Marex relied principally on common mistake and, for the later transactions, argued that Access World had undertaken contractual obligations or was estopped from denying the authenticity of the receipts.

Marex also claimed against Access World in contract, estoppel and negligence. The court determined the construction of the Purchase Contracts, the common-mistake defence, the alleged contractual and estoppel claims against Access World, Access World’s tortious duty and negligence in authenticating receipts, contributory negligence, limitation of liability and mitigation.

1. Natixis’s claim against Marex. Marex breached clauses 2(b), 2(d), 3(a), 3(b), 5 and, in relation to PC4 and PC5, clause 6(a) of the Purchase Contracts. Clause 2(b), read according to its ordinary and natural meaning, required Marex to provide objectively genuine warehouse receipts. The risk that receipts supplied by Marex might be forged was therefore allocated contractually to Marex.
2. Common mistake. The allocation of risk was fatal to Marex’s defence. Common mistake operates only to fill a gap where the contract has not allocated the relevant risk. In any event, Marex had not established that the mistake made performance impossible, and other elements of the doctrine were not satisfied.
3. Access World contractual and estoppel claims. A warehouse receipt is not a document of title. Before presentation of a genuine receipt, authentication and attornment, the endorsee has no contractual relationship with the warehouse. The authentication emails and PMA letters did not amount to collateral contracts. Estoppel could not assist because it cannot found a cause of action or create proprietary rights, and could not require delivery of goods owned by third parties.
4. Negligence. Access World assumed responsibility to Marex when it authenticated the PC4 and PC5 receipts. It negligently failed to identify obvious differences in security-paper features and signatures, and negligently represented that forged receipts were authentic. Its disclaimer in the photocopy-verification emails was clear and prevented any duty of care or reasonable reliance in relation to PC1–PC3. Access World owed no duty to Natixis because the representations were made to Marex, were not communicated to Natixis, and were not intended to be relied upon by Natixis.
5. Contributory negligence and limitation. Marex was contributorily negligent in failing to send the PC1–PC3 originals for authentication, but its conduct was neither reckless nor the effective cause of its loss. Damages were reduced by 25 per cent. Access World’s terms were adequately notified and clause 10.5 was reasonable. It limited liability to EUR100,000 per authenticated warehouse receipt. Clause 10.3 excluded only indirect or consequential loss within the second limb of Hadley v Baxendale.
6. Disposition. Natixis succeeded against Marex for the agreed purchase-price, hedging and prompt-date losses, subject to interest and determination of the indemnity issue. Marex succeeded against Access World in negligence, subject to the 25 per cent reduction and contractual cap. The contractual and estoppel claims against Access World failed. Ancillary issues were reserved.

First-instance decision of the High Court (Commercial Court). No appellate history was stated in the judgment.