Aberdeen Railway Company v Blaikie Bros (1854) UKHL 1

Case Facts for Aberdeen Railway Compay v Blaike Bros (1854):

Blaike Bros agreed to manufacture iron chairs for the Aberdeen Railway Company. The price of the iron chairs was 8.5 pounds per ton. The parties agreed to conduct their partnership within 18 months. 

The Blaike Bros performed their part of the contract. However, when they delivered two-thirds of the iron chairs, Aberdeen Railway Company cited that they are not bound with contract and cannot perform in purchasing the iron chairs because the chairman of the cBlaike Bros, who is Thomas Blaike is also the chairman and a director in the Aberdeen Railway Company. 

Blaike Bros filed a case against Aberdeen Railway Company from breaching their contract. They sought to enforce the contract and file for damages. 

Case Issue:

The issue of the case is whether or not the Railway Company is in the capacity to void the contract with Blaike Brothers for the sole reason that Thomas Blaike did not adhere to his fiduciary duty towards the company. 

The Decision for the Case

The court ruled that Aberdeen Railway Company is not bound to deliver the terms of the contract between Blaike Bros in terms of purchasing the iron chair for the railway. 

The ruling of the court is based on the fact any company can only act through the agents of the company. The agents are responsible for ensuring that the interest of the company is considered the utmost importance when conducting such transactions. 

It is the responsibility of the agents to ensure that no personal interests or conflict must arise in the transactions that the company enters into. 

In this case, Thomas Blaike took advantage of his position and put his personal interest first that could have influenced the price of the iron to possibly increase.

Read more about the case here.