Global Asset Capital, Inc & Anor v Aabar Block S.A.R.L. & Ors

When deciding whether negotiations created a contract, the court must assess the whole course of dealings, including communications after the alleged point of agreement. This inquiry differs from construing an existing contract.

Dealings expressed to be subject to contract ordinarily negate contractual intention. A party alleging that this status was waived must identify an unequivocal agreement to do so. A later proposal requiring acceptance, containing materially different terms, or remaining subject to final documentation is strongly inconsistent with an earlier binding agreement. Conditions requiring a binding resubmission and satisfactory funding evidence must be met according to their natural and ordinary meaning.

Global Asset Capital, Inc & Anor v Aabar Block S.A.R.L. & Ors concerned Global's claim that Aabar agreed by telephone on 6 May 2015 to sell a package of debt-related rights for €250 million. The original written offer had been marked without prejudice and subject to contract.

Walker J dismissed Aabar's applications for summary judgment and strike out: [2016] EWHC 298 (Comm). Aabar appealed. The principal questions were whether post-call communications could be considered in deciding whether a contract was made, whether the telephone call could have created a binding contract, and whether the alleged conditions concerning an open and binding offer and funding evidence had been satisfied.

1. Appeal allowed. Hamblen LJ, with whom McFarlane LJ agreed, held that Global's claim had no real prospect of success. Judgment was entered for Aabar.

2. The judge had erred by excluding communications after the telephone call. The question was whether a contract had been formed, rather than the meaning of an existing contract. Under Hussey v Horne-Payne (1878) 4 App Cas 311, and consistently with RTS Flexible Systems Ltd v Molkerei Alois Müller Gmbh & Co KG (UK Production) [2010] UKSC 14, the court had to consider the whole negotiations, whether oral, written or both.

3. Global's pleaded case depended on Aabar accepting the offer in the Offer Letter. Since that offer was expressly subject to contract, its acceptance could not create a contract. Global had neither pleaded nor identified a realistic case that Aabar made a new binding offer which Global accepted, or that the parties unequivocally waived the subject-to-contract qualification. Such a waiver is not lightly inferred.

4. The 9 May Letter reinforced that conclusion. It described a proposed transaction, required Aabar's acceptance by a stated deadline, invited further agreement, and introduced materially different substantive terms. It could not plausibly be treated as a mere implementation of a contract already concluded on 6 May.

5. In any event, Global had no real prospect of proving satisfaction of either condition. The requirement to resend the Offer Letter in open and binding form required the same offer, not a materially different proposal which remained subject to agreement on final documentation. The funding letter created no obligation to fund and was only a conditional, non-binding indication of support. It was not satisfactory evidence of an ability to fund the transaction, whether assessed objectively or by Aabar.

6. Any contention that an unfulfilled condition could remain outstanding indefinitely was also untenable. The conditions had to be fulfilled within a reasonable time, which had passed.

• Court of Appeal (Civil Division): allowed Aabar's appeal and entered judgment for Aabar: [2017] EWCA Civ 37.
• Commercial Court: Walker J had dismissed Aabar's applications for summary judgment and/or strike out: [2016] EWHC 298 (Comm).