Shaker v Vistajet Groups Holdings SA  EWHC 1329
Under a letter of intent for the purchase, operation and
repurchase of an aircraft. Shaker paid a deposit to Vistajet.
Shaker agreed to "proceed in good faith and to use reasonable
endeavours to agree, execute and deliver certain documents by a cut
off date". Vistajet was to refund the deposit within five days
of the cut off date where the "seller and buyer, despite the
exercise of their good faith and reasonable endeavours, failed to
reach agreement...". Various issues arose: the two for the
purposes of this bulletin were whether the LOI made the exercise of
good faith etc a condition precedent to the obligation to return
the deposit and whether Vistajet was estopped from alleging lack of
good faith because the cut off date was amended several times.
The High Court (Mr Justice Teare) ordered the return of the
deposit. He doubted that the LOI made the exercise of good faith
and reasonable endeavours a condition precedent to the return of
the deposit, but even if it was, the condition precedent would have
been unenforceable in law. The existence of such an obligation did
not enable the court to police the suggested condition precedent in
the absence of objective criteria for doing so. Vistajet was also
estopped from contending that Shaker had failed to exercise good
faith etc. It was unrealistic to suppose that the parties would
have agreed to extend the cut off date unless they had previously
exercised good faith.
This case shows just how weak an obligation to exercise good
faith in negotiations is.
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