Treatt Plc v Barratt & Ors

Treatt Plc v Barratt & Ors

The Earn-out Notice was invalid because it was not based on the audited accounts of the relevant companies for the specified period as required by the SPA; this was a substantial departure from the contract, not a mere error subject to expert determination.

Parties
Appellant: Treatt PLC; Respondents: Barratt and Others
Jurisdiction
England and Wales
Judgment Date
18 February 2015
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
Share Purchase Agreement, Earn Out Provisions, Expert Determination, Contractual Interpretation
Contract Law Commercial Law Share Purchase Agreement Earn Out Provisions Expert Determination Contractual Interpretation

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Parties

Treatt PLC

Appellant

Barratt and Others

Respondents

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the Earn-out Notice served by the Buyer was valid under the SPA given it was not based on audited accounts as required
  2. 2 Whether defects in the Earn-out Notice go to its validity or are subject to expert determination

Ratio Decidendi

The Earn-out Notice was invalid because it was not based on the audited accounts of the relevant companies for the specified period as required by the SPA; this was a substantial departure from the contract, not a mere error subject to expert determination.

Court Disposition

Appeal dismissed

Orders

  • The Earn-out Notice served by the Buyer is invalid.
  • The Earn-out remains to be determined by an independent accountant as per SPA.