B2Gold Corp. v. Condor Resources PLC, 2015 BCSC 1548
This British Columbia Supreme Court decision emphasizes the importance of due diligence in the specific context of an agreement that incorporates a second agreement by reference.
B2Gold entered into a letter agreement with Condor, a U.K.-based gold exploration company, for the exchange of concessions in Nicaragua. To carry out the exchange, B2Gold was to cause its subsidiary, Triton, to transfer two concessions to Condor, one of which the letter agreement specified was "subject to a 3% NSR in favour of Royal Gold." The NSR originated in a royalty agreement between Triton's predecessor and Royal Gold's successor, RG Exchangeco.
The royalty included provisions entitling RG Exchangeco to request further security. When further security was requested, Condor refused to grant it, arguing that it was not aware of the terms of the royalty agreement and that the royalty agreement was not binding upon it. The letter agreement was signed by Condor without it having obtained a copy of the royalty agreement, but there was considerable evidence that Condor knew of its existence.
The Court concluded that the reference to the "3% NSR in favour of Royal Gold" operated as an assignment of Triton's obligations under the royalty agreement to Condor by which Condor was bound. Condor could not avoid being bound by it by refusing to enquire into its terms and conditions.
To view the original article please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.