Aymes International limited v Nutrition 4U B.V. & Ors

Exercising a call option creates a new contract for sale and purchase. The option itself is spent and cannot subsequently lapse. Time is ordinarily not of the essence for completion unless the contract, subject matter or circumstances show otherwise. A completion mechanism which contemplates expert determination after the specified date strongly indicates that time is not essential.

Where the price formula is based on the company’s turnover, payments made to the company in lieu of trading margin may be included if the agreement and commercial context support that construction. Shares in a private company may justify specific performance where damages are inadequate, and delay or imperfect performance will not necessarily bar relief absent material prejudice or inequitable conduct.

The claimant exercised a call option to acquire all shares in NutriMedical B.V. from Nutrition4U B.V. The option agreement provided for completion on a date specified in the exercise notice and for the purchase price to be calculated under a turnover and margin formula.

Completion did not occur on the nominated date. The defendants argued that the contract had lapsed because time was of the essence, and that the option consideration paid to NutriMedical should be excluded from turnover. The claimant sought declarations and specific performance, including directions concerning the proposed CEO employment contract.

1. Option and completion. The option was validly exercised on 1 April 2020. Once exercised, it was spent and replaced by the resulting contract for sale and purchase; it could not lapse thereafter. The agreement made time essential for exercise, but not for completion. The provisions allowing completion to be postponed, and providing for expert determination which could take a month, showed that completion might not be achievable by the date in the exercise notice. The subject matter and commercial context did not displace that conclusion: the price was fixed by reference to the exercise date and was not subject to market volatility.
2. Company value. The €150,000 annual payments were properly included in NutriMedical’s turnover. They were paid to NutriMedical in lieu of the profit margin previously earned on trading with the claimant, rather than being wholly separate capital consideration. They were not sales to the claimant and were not exceptional or capital profits. The resulting company value was €526,930.
3. Expert determination. The valuation dispute involved contractual construction and was therefore outside the accountant’s delegated authority under clause 12. The expert mechanism did not make an accountant the final arbiter of legal questions.
4. Breach and relief. Both parties contributed to non-completion and neither was liable in damages. The claimant’s delay in supplying transaction documents caused no loss and its conduct did not disentitle it to equitable relief. It was sufficient that the claimant was ready, willing and able to complete when the order was made, given the defendants’ repudiatory stance and the genuine dispute over the agreement.
5. Specific performance and CEO contract. The shares were private and not readily available on the market. Damages were inadequate because of the business synergies, difficulty of valuation and enforcement risk. Specific performance was therefore ordered. The claimant’s proposed employment terms for the CEO were not entirely reasonable; the parties were given guidance and permission to apply concerning unresolved terms. Mr Ketelaar could not be compelled to provide personal services.