QRS Sciences Ltd v BTG International Ltd

A contractual right requiring a party to offer property to the other party is governed by the precise wording of the clause. Where the clause is conditional on proposed abandonment, it does not ordinarily extend to a commercial assignment. However, rectification for unilateral mistake may be ordered where the counterparty deliberately represented that the agreed drafting gave effect to a wider right and it would be unconscionable to rely on the narrower wording.

Where the clause requires an offer to assign, an invitation to treat stated to be subject to contract is insufficient. A contractual offer, capable on acceptance of creating an immediate binding contract, is required. Unless the clause provides otherwise, an offer may generally be revoked before acceptance.

BTG granted QRS an exclusive licence of a portfolio of patents under an agreement dated 27 September 2002. Clause 14.4 provided that, before abandoning a patent, BTG would not assign, withdraw, abandon or allow it to lapse without first offering to assign it to QRS.

BTG later negotiated with InVision Technologies Inc. to assign the portfolio. It sent QRS letters dated 10 March and 8/9 April 2004, each headed subject to contract and expressly stating that no binding agreement would arise until a formal contract was executed. QRS claimed that the clause applied to commercial assignments, sought rectification, and argued that the letters and a meeting on 16 March complied with BTG’s obligations.

1. Construction. The words “prior to abandoning any of the Patents” governed the subsequent obligation. On the natural reading of clause 14.4, the obligation to offer the patents to QRS arose only where BTG proposed to abandon them. A proposed commercial assignment to a third party did not trigger the unrectified clause.
2. Rectification. Rectification for unilateral mistake is exceptional. It may nevertheless be ordered where responsibility for the mistake lies fairly and squarely with the other party. QRS’s solicitor had proposed wording giving QRS a right of first offer both on abandonment and on assignment. BTG’s solicitor responded that the principle was acceptable and supplied clause 14.4, while deliberately omitting the assignment limb. That representation led QRS reasonably to believe that the wider principle had been implemented. The court regarded BTG’s conduct as sharp practice and held that it would be unconscionable for BTG to rely on the narrower wording. Clause 14.4 was rectified accordingly.
3. Nature of the required offer. The rectified clause required a contractual offer, not an invitation to treat. The letters were expressly subject to contract and incapable of acceptance so as immediately to create binding contracts. They therefore did not comply with clause 14.4. The court accepted that preliminary notification, information exchange and negotiation could sensibly precede the formal offer, but those steps were not themselves required by the clause.
4. Duration and revocation. The clause did not require an offer to remain open for a minimum period. Any reasonable-time implication concerned when an unrevoked offer would lapse, not an obligation preventing revocation before acceptance.
5. 16 March meeting. The meeting was a negotiating meeting, not a binding variation or agreement. It did not address whether clause 14.4 required a contractual offer and did not remove BTG’s ordinary power to revoke an offer before acceptance. The claim therefore succeeded to the extent of rectification and the finding that the letters did not comply, but the alleged oral agreement was rejected.