Bear Stearns Bank Plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm) (05 July 2007)

Bear Stearns Bank Plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm) (05 July 2007)

The court held that a binding contract was concluded between Bear Stearns and Forum on 14 July 2005 by oral agreement on the essential terms, including price and subject matter, with the intention to be bound notwithstanding that documentation and a specific settlement date were to be agreed later. The absence of a fixed settlement date did not prevent contract formation, as the LMA terms provided a default. Forum was not estopped by convention from denying the contract, as the evidence did not establish a shared assumption to that effect. Damages were to be assessed by reference to the value of the shares at the appropriate date, with the onward sale to Morgan Stanley not reducing Bear...

Citation
[2007] EWHC 1576 (Comm)
Parties
Claimant: Bear Stearns Bank Plc.; Defendant: Forum Global Equity Ltd.
Jurisdiction
England and Wales
Judgment Date
05 July 2007
Procedural Posture
Commercial Contract Dispute / High Court Trial Judgment
Outcome
Claim allowed in part; damages awarded to Bear Stearns
Legal Topics
Formation of Contract, Estoppel by Convention, Damages Assessment, Distressed Debt Trading
Contract Law Commercial Law Formation of Contract Estoppel by Convention Damages Assessment Distressed Debt Trading

Case Brief

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Parties

Bear Stearns Bank Plc.

Claimant

Forum Global Equity Ltd.

Defendant

Procedural Posture

Commercial Contract Dispute / High Court Trial Judgment

Legal Issues

  1. 1 Whether a binding contract was concluded between Bear Stearns and Forum on 14 July 2005 for the sale of Parmalat notes
  2. 2 Whether Forum is estopped by convention from denying the existence of the contract
  3. 3 How damages should be assessed, including the effect of Bear Stearns' onward sale to Morgan Stanley and the relevant date for valuation

Ratio Decidendi

The court held that a binding contract was concluded between Bear Stearns and Forum on 14 July 2005 by oral agreement on the essential terms, including price and subject matter, with the intention to be bound notwithstanding that documentation and a specific settlement date were to be agreed later. The absence of a fixed settlement date did not prevent contract formation, as the LMA terms provided a default. Forum was not estopped by convention from denying the contract, as the evidence did not establish a shared assumption to that effect. Damages were to be assessed by reference to the value of the shares at the appropriate date, with the onward sale to Morgan Stanley not reducing Bear...

Court Disposition

Claim allowed in part; damages awarded to Bear Stearns

Orders

  • Forum to pay damages to Bear Stearns for breach of contract, quantum to be assessed based on the value of Parmalat shares at the relevant date
  • Claim for specific performance dismissed as not pursued