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Call Option Agreement Practical Law

Call Option Agreement Practical Law

In Teekay Tankers vs. STX Offshore & Shipbuilding [2017] EWHC 253 (Comm), the High Court considered whether an options agreement for tanker construction was not concluded due to uncertainty. At the beginning of 2020, most industry players expected FinTech M&A and investments to continue to thrive this year, with larger deals and increased participation from “Big Tech”, which would help mature the sector. The applicant initiated the procedure in April 2014. It argued that the defendant had rejected and abandoned the option agreement and that it had the right to terminate and terminate that agreement. It claimed damages for the loss of profits. The defendant argued that the option agreement was not concluded because of the uncertainty of its conditions. It relied on its argument on the phrase “mutually agreed” and argued that the contract had failed because the delivery dates, a key issue, had not been agreed between the parties and had been agreed in the future. In other words, the option agreement was an unenforceable “agreement agreement”. It also argued that it had not rejected or abandoned the option agreement.

As a result, the Commercial Court decided that, although the parties wanted the option agreement to be binding, it was not applicable due to uncertainty, given that the delivery dates were not agreed and left for the future agreement between the parties. The Court also found that, if it had not reached that conclusion, it would have found that the defendant`s conduct assimilated to a waiver of the contract and that it was liable to the applicant. The Commercial Court examined the principles applicable to the agreements to be concluded in the main judicial appel appelle authorities of Mamidoil-Jetoil Greek Petroleum and B J Aviation. One of the fundamental principles that flows from these decisions is that if the parties have agreed on an essential matter in the context of an effective construction of the contract (for example. B the price in a contract for the sale of goods or the provision of services) in the future, the contract is probably unenforceable due to uncertainty. The decisions are also decisive for the argument that, when it is satisfied that the parties intend to implement their agreement, it should endeavour to achieve that intention by the construction or implication of a provision. However, the implied provision must not be contrary to the Tribunal`s conception of explicit contractual conditions. The applicant exercised Option 1 by letter of 2 October 2013.

In the end, no delivery date was agreed and the parties did not enter into shipbuilding contracts for the four tankers under the option. The Commercial Court responded to the applicant`s assertion that the parties intended to conclude a binding contract and was therefore endeavouring to implement the option agreement. It stated, inter alia, that the option agreement was part of a `package` of contracts and that the consideration for the grant of the options by the defendant was also paid to the subsidiaries of the applicant which concluded the shipbuilding contracts. . . .

2021-09-13T13:19:34+00:00