Cunliffe-Owen v Teather & Greenwood – Case Summary

Cunliffe-Owen v Teather & Greenwood

Same v Schaverien Habermann, Simon & Co

High Court (Chancery Division)

Citations: [1967] 1 WLR 1421; [1967] 3 All ER 561; (1967) 111 SJ 866; [1967] CLY 3740.


The claimant, via his stockbroker, entered into six contracts for share options with the defendants. These contracts entitled the claimant to buy shares in a certain company at a fixed price until a particular date. To use the options and actually buy the shares, the claimant needed to make a valid ‘declaration’. The defendant had told the claimant that the contract was ‘subject to the rules, regulations and usages of the Stock Exchange’. Under those rules, if the buyer does not declare their option by the relevant date, they abandon the option. Additionally, only members of the Stock Exchange could make valid declarations. This typically meant that buyers had to make declarations via their stock broker.

The next day, the Stock Exchange changed the rules concerning shares and share options in that company. The claimant refused to acknowledge the changes, comply with the defendants’ proposed changes to the mode of delivery to comply with the new rules, or submit the dispute to arbitration before the Stock Exchange Council. As a result, the defendants told the claimant that they would not accept any declaration on the claimant’s proposed terms.

Ignoring this, the claimant personally sent the defendants letters purporting to declare the options on his own terms. The defendants rejected those letters. The deadline for declaring the share options then passed. The Stock Exchange held that the claimant had abandoned their options.

The claimant sued the defendants for a declaration that the options had been validly declared and damages for breach of contract.

  1. Had the defendants repudiated the contracts by failing to declare the shares?
  2. Were the rules of the Stock Exchange part of the contract?
  3. Could the claimant declare the options himself, despite not being a member of the Stock exchange?

The High Court held in favour of the defendants. The defendants were not repudiating the contract by refusing the deliver on the claimant’s terms. The defendants merely differed in their interpretation of the contract, and were prepared to perform according to its correct interpretation. The Stock Exchange rules were incorporated into the contract by customary trade usage. As such, the defendants had not breached the contract and the claimant had failed to make a valid declaration by the due date.

This Case is Authority For…

A party is not in repudiatory breach of contract merely because they differ from the other party in their interpretation of the contract, assuming they are willing to carry out the contract according to its correct meaning.

A term can be incorporated into a contract by customary use in trade. For this to be the case, three requirements must be met:

  1. The term must be ‘certain’: its content must be clearly established by trade practice;
  2. The term must be ‘notorious’: it must be so well-known in the relevant market that those who contract in that market do so with the term implied; and
  3. It must be reasonable.

The party who seeks to rely on the alleged contract term bears the burden of proving these requirements. It is not relevant that the other party was not aware of the trade usage.


The court noted that the desirability of a term is not enough to establish custom – there must be actual, certain and notorious use.