Boots The Chemist Limited & Anor v Amdahl (UK) Limited

A contractual variation is construed objectively in its commercial context. A letter issued during negotiations may constitute an offer of a variation, or confirm an agreement already reached orally, even where it contains several related terms. The terms must be considered as a whole when determining whether there is a simple mode of acceptance. A variation satisfies consideration where, taken overall, it is capable of benefiting or prejudicing either party. A possible benefit or detriment is sufficient, even if a particular term benefits only one party.

The appeal arose from a decision of Thomas J dated 12 March 1999. The judge awarded damages after finding that Amdahl was contractually obliged to repurchase computer equipment from Boots in 1996 and had breached that obligation by refusing to do so.

Amdahl argued that the July 1995 correspondence contained separate offers, that the relevant offer had been withdrawn before acceptance, and that any variation lacked consideration. Boots relied on an oral variation confirmed by the correspondence, or alternatively on acceptance of a written offer by its subsequent exercise of an existing buy-back option.

1. Appeal dismissed. The Court of Appeal unanimously upheld the finding that Amdahl was obliged to repurchase the 3570M processor in 1996. The order was for dismissal of the appeal with costs, subject to detailed assessment if not agreed. Leave to appeal to the House of Lords was refused.
2. The parties’ communications were to be construed objectively, having regard to the commercial reality and the purposes they were seeking to achieve. The July 1995 letter was intended either to offer, or to confirm, a variation of the existing buy-back arrangements. The reference to the 5570M did not prevent the letter from having that effect.
3. The letter’s terms were to be read together. The first bullet point, extending the 1995 deadline, was not a separate offer. Boots were offered the overall combination of an extended 1995 period and a 1996 option at a lower price. Alternatively, the court held that the letter contained an offer of variation which Boots accepted by its letter of 8 August 1995.
4. The court accepted that the telephone conversations and the second letter provided evidence on which the judge could find that an agreement had already been reached. The letter confirmed that the 1996 buy-back entitlement was not conditional on upgrading or retaining the 4570M.
5. There was good consideration for the variation. The variation was capable of benefiting or prejudicing either party. Amdahl gained the possibility of avoiding repurchase of both processors in 1995, paying less if repurchase occurred in 1996, and retaining a further opportunity to secure Boots’ custom. Boots gained additional time to decide, while accepting the detriment of a lower price if the later option was exercised.

• Court of Appeal (Civil Division): appeal from the decision of Thomas J in the High Court of Justice, Queen’s Bench Division, Commercial Court, dated 12 March 1999. Appeal dismissed with costs.