Marksans Pharma Ltd v Peter Beck & Partner VVW GmbH

A party cannot rescind a settlement agreement for misrepresentation unless the alleged representation is proved. A valid tender may be established, or further steps may be dispensed with, where the other party has made clear that it will not perform a reciprocal obligation and additional steps would be futile. In a transaction requiring mutual cooperation, readiness and willingness to perform may therefore suffice where the counterparty has prevented completion. Specific performance remains available where the contractual obligation is sufficiently certain and the circumstances make that remedy appropriate.

Marksans sought specific performance of the final tranche of a settlement agreement under which it was to repurchase bonds held by Peter Beck & Partner VVW GmbH. The defendant alleged that Marksans had represented that it had bought back all other outstanding bonds. It sought rescission for misrepresentation, alternatively damages, and opposed specific performance on the ground that Marksans had not validly tendered performance.

The principal factual issue was whether the alleged representation had been made. The remedial issue was whether Marksans’ steps, including placing the required funds with its broker and notifying the defendant that it was ready to complete, amounted to a sufficient tender when the defendant had stated that it would not transfer the bonds.

1. Misrepresentation. The claim for rescission failed. The court preferred the evidence of Marksans’ witnesses and found that no representation had been made that Marksans had bought back all bonds other than those held by the defendant. It was therefore unnecessary to decide falsity, intention to induce or inducement. The judge added that inducement would in any event not have been proved.

2. Tender. The authorities establish that a tender ordinarily requires performance to the fullest extent possible. However, Farquharson v Pearl Assurance [1937] 3 All ER 124 shows that further tender may be dispensed with where the circumstances demonstrate readiness and willingness to pay, or where the receiving party has refused the opportunity to accept payment. The principle applies with particular force where completion requires matching instructions and cooperation from both parties.

3. Application. Marksans had placed the funds with its broker and made clear to the defendant that it was ready, willing and able to complete. The defendant had expressly stated that it would not deliver the bonds. Issuing a trade confirmation or giving further payment instructions would consequently have been futile. Any further steps required for a valid tender had been dispensed with by the defendant’s refusal to perform.

4. Relief. Specific performance was appropriate. Marksans’ claim succeeded, the defendant’s counterclaim was dismissed, and an order for specific performance was made.