Withholding Consent In A Commercial Context - What's Reasonable?

In the recent case of Porton Capital Technology Funds & Ors v 3M UK Holdings Ltd & Anor1 the English High Court considered the relevant principles to be applied where a Share Purchase Agreement ("SPA") provided that the purchaser of the business could not cease to carry on the business without the vendor's consent, such consent "not to be unreasonably withheld". The case provides useful guidance on the meaning to be applied to this phrase in a commercial context. Background The defendant purchased Acolyte Biomedica Limited ("Acolyte") under a SPA in February 2007. The consideration consisted of £10.4m in cash and an earn-out payment based on net sales for the year 2009, capped at £41m. The claimants represented 60% of the shareholder vendors. Acolyte's product was a product used in detecting MRSA called BacLite. The business subsequently failed and it ceased in December 2008. There were therefore no sales in 2009, to form the basis of the earn-out...