Cepia HK Ltd v The Character Group Plc [2016] EWHC 3133 (Comm) (08 December 2016)

Cepia HK Ltd v The Character Group Plc [2016] EWHC 3133 (Comm) (08 December 2016)

The court held that the 'Distribution Agreement' referenced in the Option Agreement was not a formal written contract but the ongoing course of dealing between the parties, whereby the Defendant was given the opportunity to bid for the Claimant's products and, if successful, became the exclusive distributor for those products in the UK and Ireland. The court found that the Claimant had complied with this arrangement up to the point of exercising the option, and that the Defendant's arguments regarding termination and exclusivity were not supported by the evidence or the proper construction of the Option Agreement. The option was validly exercised.

Citation
[2016] EWHC 3133 (Comm)
Parties
Claimant: Cepia HK Limited; Defendant: The Character Group PLC
Jurisdiction
England and Wales
Judgment Date
08 December 2016
Procedural Posture
Commercial Contract Dispute / Trial Judgment
Outcome
Claim allowed
Legal Topics
Share Option Agreements, Distribution Agreements, Contract Formation, Interpretation of Contracts, Conditional Contracts
Contract Law Commercial Law Share Option Agreements Distribution Agreements Contract Formation Interpretation of Contracts Conditional Contracts

Case Brief

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Parties

Cepia HK Limited

Claimant

The Character Group PLC

Defendant

Procedural Posture

Commercial Contract Dispute / Trial Judgment

Legal Issues

  1. 1 What was the nature of the 'Distribution Agreement' referenced in the Option Agreement?
  2. 2 Did the Distribution Agreement continue in existence up to the date of exercise of the option?
  3. 3 Was the option to purchase shares validly exercised by the Claimant?

Ratio Decidendi

The court held that the 'Distribution Agreement' referenced in the Option Agreement was not a formal written contract but the ongoing course of dealing between the parties, whereby the Defendant was given the opportunity to bid for the Claimant's products and, if successful, became the exclusive distributor for those products in the UK and Ireland. The court found that the Claimant had complied with this arrangement up to the point of exercising the option, and that the Defendant's arguments regarding termination and exclusivity were not supported by the evidence or the proper construction of the Option Agreement. The option was validly exercised.

Court Disposition

Claim allowed

Orders

  • The Defendant is ordered to issue 1 million shares to the Claimant at the agreed option price of £1.225 per share.