ASTRA ASSET MANAGEMENT UK LTD v THE CO-OPERATIVE BANK PLC

[2019] EWHC 897 (Comm), Commercial Court, Andrew Henshaw QC sitting as a Judge of the High Court, 10 April 2019

Subject to contract – Duty to negotiate in good faith – Claim in restitution

The defendant applied for summary judgment or, in the alternative, to strike out three claims brought by the claimant. The first was a claim for breach of an alleged contract for the sale by the defendant to the claimant of certain debts and security interests. It was held that the defendant was entitled to summary judgment in respect of this part of the claim. The principal reason for so concluding was that the discussions between the parties had been undertaken on a subject to contract basis. Similarly, the recital to the Exclusivity Agreement stated that "the Buyer and the Seller intend to enter into the Transaction subject to contract". For the claimant it was submitted that the words "subject to contract" had not been used as a term of art. This submission was rejected by the judge who held that it is a term of art with an established meaning. Further, he stated that to disapply or depart from its established meaning without a very good reason would be liable to disappoint the reasonable expectations of parties engaged in commercial discussions. Given the "subject to contract" stipulation it was held that the dealings between the parties were incapable of giving rise to a contract and there was no evidence of any waiver of the "subject to contract" stipulation.