This week:
- A written notification sent under a purchase price adjustment mechanism did not need to comply with contractual requirements for sending notices
- The FRC publishes an updated version of its UK Stewardship Code following its consultation last year
Notification disputing purchase price adjustment did not need to comply with contractual notice requirements
In what might seem a surprising decision, the High Court has held that a notification disputing a price adjustment under a completion accounts mechanism did not need to comply with the contractual requirements for notices under the contract.
The case illustrates the need for careful drafting to make it clear how parties should serve different types of notification under a contract, as well as to examine the notice provisions of a contract carefully before notifying another party.
Inspired Education Online Ltd v Crombie [2025] EWHC 1236 (Ch) concerned the sale by an individual of the shares in an online education company to a buyer in the same sector.
As is usual, the terms of the sale, including the purchase price, were set out in a share sale and purchase agreement (SPA).
The SPA contained a "completion accounts" schedule, the purpose of which was to adjust the purchase price upwards or downwards after completion of the sale and purchase by reference to an estimated asset value.
The SPA stated that, once he received the draft completion accounts, the seller was required to "notify the Buyer in writing whether [he] agrees with the [draft completion accounts] ...", and that, if he failed to make such a "written notification", he would be deemed to have approved the draft accounts.
The SPA also contained a notice clause requiring any "notice" given under or in connection with the SPA to be sent (among other things) for the attention of a specified contact.
The seller challenged the draft completion accounts. However, he emailed his response not to the person specified in the notices clause, but rather to the individual who had sent him the draft accounts.
The buyer claimed that the seller had not notified the buyer in accordance with the notices clause, that his purported email notification was invalid, and that he was therefore deemed to have approved the draft completion accounts.
The court agreed with the seller. It found that an obligation to "notify ... in writing" was different from an obligation to send a written "notice". In particular, the use of the words "notify" and "notification" indicated a less formal means of communication than that prescribed by the notices clause.
The case shows the need for careful drafting when negotiating a commercial agreement, and to scrutinise the terms of a contract carefully when sending communications relating to it.
FRC publishes UK Stewardship Code 2026
The Financial Reporting Council (FRC) has published an updated version of its UK Stewardship Code.
The Code sets out what the FRC considers best practice for institutional asset owners and asset managers when exercising their stewardship responsibilities.
Like the FRC's UK Corporate Governance Code, it operates on a "comply or explain" basis. Certain asset managers are required to report against the Stewardship Code under the Financial Conduct Authority's Conduct of Business Sourcebook. Other institutional investors can apply to become "signatories" to the Code and adopt it voluntarily.
The changes follow the FRC's consultation in November 2024. You can read our previous Corporate Law Update for more information on the FRC's consultation on changes to the Stewardship Code.
Access the FRC's UK Stewardship Code 2026 (opens PDF)
Access the FRC's at-a-glance guide to the UK Stewardship Code 2026 (opens PDF)
Read the FRC's press release on the launch of the UK Stewardship Code 2026
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