Federal Appeal


Defendants could only require plaintiffs to sell in accordance with compliant offer

Motion judge granted partial summary judgment in commercial dispute about exercise of shotgun buy-sell provision in partnership agreement. Defendants’ buy-sell offer contained two alternatives and plaintiffs could accept either. Motion judge found that buy-sell offer did not perfectly comply with shotgun buy-sell provision, but it was valid and enforceable. Plaintiffs appealed. Appeal dismissed. In deciding whether defendants’ shotgun buy-sell offer met strict compliance test, commercially reasonable expectations of sophisticated parties in factual context must be considered. It was open to offerors to include alternative in buy-sell offer for plaintiffs’ consideration even if alternative offer was not contemplated by partnership agreement. Inclusion of alternative in shotgun buy-sell offer that did not comply strictly with shotgun buy-sell provision in partnership agreement did not affect enforceability of buy-sell offer provided that compliant alternative was also included. Buy-sell offer was valid and enforceable since it contained compliant alternative, which plaintiffs were free to accept, and mere inclusion of other alternative did not invalidate buy-sell agreement or render it unenforceable. Court would not enforce shotgun buy-sell offer that was not strictly compliant with buy-sell provision, but it would enforce compliant buy-sell offer. That accorded with commercially reasonable expectation of parties. Defendants could only require plaintiffs to sell in accordance with compliant offer. Buy-sell offer was sufficiently compliant with shotgun buy-sell provision in partnership agreement to meet strict compliance standard. Strict compliance was not perfect compliance. Motion judge did not err in fixing applicable measure of damages as plaintiffs’ full compliance with compliant buy-sell offer, as that reflected commercially reasonable expectation of parties in context of triggered shotgun buy-sell offer under partnership agreement.

Western Larch Ltd. v. Di Poce Management Ltd. (Nov. 29, 2013, Ont. C.A., E.E. Gillese J.A., M. Tulloch J.A., and P. Lauwers J.A., File No. CA C56453) Decision at 224 A.C.W.S. (3d) 296 was affirmed.  235 A.C.W.S. (3d) 248.

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