CL-2022-000025 - [2025] EWHC 2331 (Comm)

In support of his argument that the SPA contained the alleged “Co-operation Implied Term”, Mr Perelman relied on a number of authorities, including the following:

Mr Lemer also acknowledged that where the implication of the term is not necessary to make the contract workable, it will not be implied. It is, therefore, an application of the requirements set out in Marks v Spencer plc v BNP Paribas (above), not an exception to it. As Cooke J put it in James E McCabe Ltd v Scottish Courage Ltd [2006] EWHC 538 (Comm) at paragraph 18:

“A duty to co-operate in, or not to prevent, fulfilment of performance of a contract only has content by virtue of the express terms of the contract and the law can only enforce a duty of co-operation to the extent that it is necessary to make the contract workable. The court cannot, by implication of such a duty, exact a higher degree of co-operation than that which could be defined by reference to the necessities of the contract. The duty of co-operation or prevention/inhibition of performance is required to be determined, not by what might appear reasonable, but by the obligations imposed upon each party by the agreement itself.”

The term contended for was that parties to the SPA would not frustrate settlement of the SPA occurring and/or would co-operate to take reasonable steps to ensure settlement occurred. That there was an obligation on Mr Kerr not to frustrate settlement of the SPA occurring is relatively straightforward. The parties had agreed that the transaction would complete on the terms they had agreed, and it was implicit in that, and necessary for business efficacy and obvious, that neither party would block or frustrate completion on the agreed terms.

The alleged obligation to co-operate, though, cannot be taken too far. The contract here is a relatively straightforward share sale agreement. For example, it was not up to Mr Kerr to supply Mr Perelman with the facilities to transfer the shares to him (which appeared at some points to be Mr Kerr’s understanding of the case being advanced against him). It was Mr Perelman’s obligation to transfer the shares, and it is not necessary, to make the contract work, for there to be an obligation on Mr Kerr to put in place what was required to arrange the transfer. Similarly, there could not be an obligation upon Mr Kerr, for example, requiring him to give advice to Mr Perelman as to the different ways in which Mr Perelman could transfer the shares or as to the pros and cons of each possible way.

However, that does not mean that there was no obligation not to frustrate the settlement of the transaction or to fail to co-operate in relation to the logistics. In particular, what the parties did need to liaise over, and therefore co-operate in relation to, was timing of settlement and confirming that each would accept the other’s performance. This was important because the central obligations in the SPA (Mr Perelman’s obligation to transfer the shares on the one hand, and Mr Kerr’s obligation to pay the price on the other) were both dependent ones. In other words, Mr Perelman had to transfer the shares in order to be entitled to the money, and Mr Kerr had to pay the money in order to be entitled to the shares. As it was put by Sir Colin Rimer in Doherty v Fannigan Holdings Limited [2018] EWCA Civ 1615 at paragraph 42: “Neither party was entitled to enforce the performance of the other’s except against a performance of his/its own.” Although not expressly so stated in the SPA, this arises from the nature of the transaction, and neither party disputed it. Mr Lemer expressly accepted this was the position in his submissions. It was also inherent in much of Mr Kerr’s presentation of the case and in his evidence, including where he emphasised the need for the obligations of each party to be performed simultaneously.

Here, it was clear from their contemporaneous exchanges and their evidence that neither party anticipated performing unilaterally. Rather, each anticipated a form of completion where each had some form of assurance of the other’s performance. This required liaison and confirmation that each was prepared to accept what the other was tendering by way of performance. If one party was offering performance he was contractually entitled to make, the other needed to co-operate by confirming he would carry out his own performance in return. There was, therefore, an implied term as Mr Perelman contended, though what the “reasonable steps” might be for a party to take in co-operation in this context are likely to be relatively limited.