[2002] EWHC 2094 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION	HC02C01056

										  Royal Courts of Justice
										  Strand
										  London WC2A 2LL

									   Wednesday, October 16, 2002

Before
MR JUSTICE LAWRENCE COLLINS

Between

					   iSOFT GROUP PLC				Claimant

and

(1)  MISYS HOLDINGS LIMITED
					       (2)  MISYS PLC				Defendants

JUDGMENT
Approved by the Court for handing down

 Mr Lawrence Cohen QC and Mr Stephen Moverley Smith QC (instructed by Pinsent Curtis Biddle) for the Claimant

Mr Andrew Onslow QC and Mr Orlando Fraser (instructed by Allen & Overy) 
for the Defendants

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken 
of this judgment and that copies of this version as handed down may be treated as authentic.

………………………………………….
(Mr Justice Lawrence Collins)

………….

Mr Justice Lawrence Collins:
I	Introduction
1.	The claimant, iSOFT Group plc (“iSOFT”), was founded in 1994 by Patrick Cryne, who is now its chief executive officer.  It is a publicly-quoted, Manchester-based, software group, with a turnover of approximately £31m in the year to April 30, 2001, specialising in the provision of information technology systems to the UK healthcare industry, particularly laboratory systems and patient information management systems.  
2.	The second defendant, Misys plc (“Misys”), is an international software applications group, with a turnover of approximately £850m.  Its core business is the development and licensing of specialist computer software for the banking, financial services and healthcare industries.  The business was started in 1980, and has grown substantially since, mainly by corporate acquisitions.  Its healthcare division, which now operates under the brand Misys Healthcare Systems, is based in Raleigh, North Carolina, and chiefly operates in the United States.  The main element of the healthcare division was a substantial US company, Medic Computer Systems LLC  (“Medic”), which was acquired by Misys in 1997.  It did not have any activities in Europe.
3.	In these proceedings iSOFT seeks to enforce against Misys, and its subsidiary Misys Holdings Ltd (“Holdings”), the first defendant, an agreement entered into between them by which iSOFT acquired from Holdings the leading laboratory information systems provider in the United Kingdom, ACT Medisys Ltd (“ACT”).  
4.	One of the terms of the agreement required the Misys group (in circumstances to which I revert in detail later) to offer to sell to iSOFT after-acquired competing businesses “for a consideration equal to the then fair market value of such business and otherwise on such detailed terms and conditions which are fair and reasonable” to the relevant member of the Misys group and to iSOFT.  One of the principal issues in these proceedings is the scope and application of the rules relating to certainty of contractual terms.
II	The acquisition and disposal of ACT
5.	In 1995 Misys had acquired, through Holdings, ACT Group plc, a UK information technology company which included a healthcare business, ACT, among its subsidiaries.  In 2000 the UK healthcare business was expanded when ACT acquired CDS Group Ltd. (“CDS”), a leading laboratory information systems provider.  ACT and CDS sold their systems primarily to the UK and Ireland.
6.	In 1998 the Department of Health and the National Health Service executive published plans to implement a strategy designed to ensure that information technology was used to help patients receive the best possible care.  The first phase (to March 2003) included the creation of the first stage of a National Health Record Service, and the development of an Electronic Patient Record system.  In 1999 the Department of Health set up a pathology modernisation programme to improve the quality and efficiency of NHS pathology services, including the integrated use of information and communication technology.
7.	Despite these developments, Misys did not find the UK healthcare market an attractive place to do business, because purchasing decisions are difficult to anticipate and the market is politically sensitive, both for access to funding and the approach taken to information technology, and wished to concentrate on expanding its US business.  iSOFT had a substantial business in supplying patient information systems to NHS and private hospitals, but did not have a competitive laboratory information system.  As a result, after negotiations which commenced in September 2000, Misys sold ACT to iSOFT for £24 million in December 2000.
8.	The ACT Sale Agreement (“the Agreement”) was signed on December 14, 2000 and completed on February 5, 2001.  Allen & Overy and PriceWaterhouseCoopers acted for Misys, and Pinsent Curtis Biddle (“Pinsents”) and RSM Robson Rhodes acted for iSOFT on the Agreement, and in addition Ashurst Morris Crisp (“Ashursts”) acted for iSOFT on the merger clearance. 
The Agreement
9.	The Seller as defined was Holdings, and its obligations were guaranteed by Misys. The heading of clause 11 is “protection of goodwill,”  but clause 1.4 provides that the headings to clauses are for convenience only and are not to affect the interpretation or construction of the Agreement.
10.	Clause 11.1 defines the expression “Restricted Person” to include any member of the “Seller’s Group,” which means Holdings, any subsidiary undertaking or parent undertaking of Holdings and any subsidiary for the time being of a parent undertaking of Holdings (clause 1.1) (i.e. it included after acquired subsidiaries).
11.	By clause 11.2.1 Holdings undertook to iSOFT that without the latter’s written consent: 
“... for a period of 3 years from Completion it will not and will procure that no other Restricted Person will in any capacity whatsoever directly or indirectly carry on or assist in carrying on or be engaged, concerned or interested in any activity or undertaking which is the same as, or substantially similar to, the business of the Company or any Group Company as carried on at the date of this Agreement or at Completion (‘Restricted Business’) within the Restricted Area ...”
12.	The “Company” and “Group Company” meant ACT and its subsidiaries (clause 1.1).  The Restricted Area was the UK, South Africa, Poland, Ireland, Kenya, Switzerland and Zimbabwe (clause 11.1).
13.	Clauses 11.2.2, 11.2.3, and 11.2.4 contained provisions prohibiting for three years the solicitation by the Misys group of customers, suppliers and employees.  Clause 11.2.5 prohibited the future use by any Restricted Person of the trade names associated with the business carried on by ACT.
14.	By clause 11.4 nothing in clauses 11.2.1 (three year restrictive covenant) and 11.2.2 (three year non-solicitation of customers) was to prevent any Restricted Person from acquiring any interest in any entity “which carries on a Restricted Business in the UK” provided that the number of employees employed in the UK in the Restricted Business did not exceed 20 per cent of the total number of employees employed in the entity acquired, and by clause 11.4.2 	
“... the Seller shall procure that relevant Restricted Person shall within 3 months of the completion of the acquisition of the entity offer to sell to the Buyer that part of the acquired entity which carries on a Restricted Business (‘Target Business’) for a consideration equal to the then fair market value of such business and otherwise on such detailed terms and conditions which are fair and reasonable to both the relevant Restricted Person and the Buyer.  The Buyer shall and the Seller shall procure that the relevant Restricted Person shall negotiate in good faith to agree and complete such sale and purchase as soon as is practicable if the Buyer indicates that it wishes to acquire the Target Business.  The Seller shall procure that all information and documents reasonably necessary to enable the Buyer to consider the offer and the business and assets the subject of the offer are made available to the Buyer and that all reasonable requests for further access to information, property or personnel are complied with.  If the Buyer declines to buy the Target Business, the Restricted Person shall be free to dispose of it on no worse terms to it than it proposed or negotiated with the Buyer (or in relation to the consideration, in the absence of a proposal by the Restricted Person relating thereto, on terms no worse than the fair market value thereof).”
15.	By clause 21, if any provision were held to be unenforceable or illegal, such provision was to be deemed not to form part of the Agreement and the enforceability of the remainder was to remain unaffected. By clause 23.1 the failure of either party to exercise, or the delay in exercising, any right or remedy under the Agreement was not to constitute a waiver of the right or remedy.
16.	Clause 13 contained elaborate provisions dealing with existing disputes between ACT and third parties, so that Holdings would indemnify iSOFT from liability, and Holdings would have the conduct of any proceedings.  Schedule 3 contained some 30 pages of detailed warranties given by Holdings to iSOFT.
17.	Clause 28.2 provided for the exclusive jurisdiction of the English court in relation to any dispute or claim arising out of or in connection with the Agreement.  But in relation to certain specified matters, provision was made for alternative dispute resolution.  First, clause 4 envisaged an upward adjustment to the consideration where the net current assets were more than £1.4 million, or a downward one where they were less than £1.35 million, and schedule 7  provided for claimed adjustments to be resolved by the parties’ accountants, or, in default of agreement, by an accountant appointed by the President of the Institute of Chartered Accountants acting as an expert.  Second, Schedule 1, Pt II, para. 2.6 provided that if iSOFT recovered any damages against a landlord for unreasonable refusal of a licence to assign, they would be divided between Holdings and iSOFT in such fair and equitable manner as they might agree, or, failing agreement, as determined by an arbitrator chosen (in default of agreement) by the President of the Law Society.
III	Sunquest acquisition
18.	In December 2000 Misys was informed by Deutsche Bank that Sunquest Information Systems Inc. (“Sunquest”) was a possible purchase target for Misys.  Sunquest was a US corporation specialising in laboratory, radiology and pharmacy information systems, based in Tucson, Arizona.  In June 2001 Misys made an offer for the share capital of Sunquest, valuing Sunquest at $404 million, and the acquisition was completed on August 1, 2001.  
19.	The main products of Sunquest were FlexiLab (an integrated pathology system), FlexiRad (a radiology information system) and FlexiMed (a pharmacy information service).  The Sunquest acquisition expanded Misys' US healthcare activities from physician and home healthcare systems into hospitals.
20.	Since 1994 Sunquest had a subsidiary, Sunquest Europa Limited (“Europa”).  Europa promoted, sold and supported Sunquest IT products in the UK, Ireland and Denmark, and was seeking contracts elsewhere in Europe and also in the Middle East, where it had had some success.  
21.	The UK business was a very small part of Sunquest (fewer than 10 employees out of a total of about 800).  It occupied serviced offices in West Sussex.  It relied entirely on Sunquest for the supply of product, and was dependent on Sunquest for administrative support and customer service functions.
22.	The relationship between Sunquest and Europa was summarised in the Company Overview supplied by Misys to iSOFT in September 2001: 
“US based support
Europa is essentially a frontline sales and support entity in Europe.  As a result, Europa is heavily dependent upon the Sunquest Information Systems’ US operation for the following functions:
1.	R&D including product customisation for specific markets.  All intellectual property relating to the Sunquest products are owned by the US parent.
2.	In the spheres of client delivery the US parent has hitherto provided implementation support and well as providing resources for client consulting, training and development (“TID”).
3.	As described previously, the US parent provides 1st and 2nd line support to Europa clients outside normal office hours and provides all 3rd line support.
4.	Administratively, Europa receives extensive support in the areas of finance, general administration, human resources and legal, including contract services.
5.	Europa also receives marketing support from the US including literature, exhibition support, advertising etc.
6.	Lastly, Europa relies upon the US parent for executive management and direction.”
23.	As a wholly-owned subsidiary of Sunquest, Europa did not have any formal licensing, distribution, customer support and service or royalty arrangements with Sunquest. Europa distributed the three product lines, and Sunquest had to approve all sales orders.  
24.	Europa was established to compete in Europe, but it had no defined territory for its operation, and it was also soliciting customers in the Middle East.  It had substantial laboratory and radiology contracts for hospitals and health services in Ireland and Denmark, and one of its employees was based in Denmark to provide support for Europa’s Danish clients.  It had also been appointed vendor of choice for a substantial contract with the Department of Health in Dubai.
25.	It paid its parent company the equivalent of a 50% royalty on the licence fees it received from customers.  This transfer pricing arrangement has been approved by the United Kingdom Inland Revenue, and is apparently satisfactory to the United States Inland Revenue Service.  Europa made trading losses (after payment of royalties) in 3 of the 4 years prior to the acquisition.  At the time of completion of the Sunquest acquisition, Europa had 23 contracts for Sunquest products, covering 35 sites in the UK, Ireland and Denmark.
26.	Following the acquisition of Sunquest by Misys, a number of Sunquest board directors, including Europa’s three directors, left the company, and other Sunquest board members were appointed as replacements on its board.  They were Tom Skelton, Sunquest board member and Misys Healthcare Systems chief executive officer; Charles Lambert, Sunquest board member and Misys Healthcare Systems chief financial officer; and Andrew Lawson, Sunquest board member and Sunquest chief operating officer.  All three live in the United States, and work in Misys’ healthcare division, and none is an employee of Europa. 
27.	The staff of Europa consists of a sales manager (Mr Blay, whose business title is Regional Director, Europe) six sales and customer support personnel and one administrative staff member.  None of its employees is a board director of Europa or any other Misys company.  None of Europa’s directors is an employee or an executive of Europa.
28.	Following a policy first adopted in 1999, in late January 2002 all companies in Misys’ Healthcare division participated in the worldwide re-branding exercise by which they were brought under Misys Healthcare Systems brand name, and now use the Misys logo.  Misys’ webpage says that what were once Medic, Sunquest and Homecare Information Systems are now Misys Healthcare Systems, which is a division of Misys.
29.	Sunquest has changed its name to Misys Hospital Systems Inc, and Medic Computer Systems LLC has changed its name to Misys Physicians Systems LLC, but I shall use former names to avoid confusion.  In March and April 2002 Europa solicited business for Sunquest products at trade fairs in Harrogate and Dublin under the Misys Healthcare Systems brand-name and logo, and referred to Misys Healthcare Systems as “formerly Sunquest Information Systems.”  It also accepts that Sunquest and Europa (as Misys Healthcare Systems) placed an advertisement for a UK based employee for Europa.
WLPC Contract
30.	The West London Pathology Consortium (WLPC) contract was a project for the supply of a pathology laboratory system, and continuing support and service, to a consortium of 5 major London hospitals. The WLPC contract award process began in December 1999 and in January 2000 Europa asked to be included in the invitation to tender on the basis of Sunquest’s experience in the field.  iSOFT and others also competed for the contract.   
31.	At the time of the acquisition of Sunquest by Misys in June 2001, Europa was the front-runner for the award of the contract.  It was appointed vendor of choice in August 2001, and was awarded the contract in March 2002.
32.	WLPC's managers (Jeremy Beacham, Kevin Feltham) were concerned about the impact of the Misys/Sunquest takeover, and then about the possibility of Europa's sale to iSOFT.  On June 27, 2001 Mr Ross Graham (the corporate development director of Misys) learned from Dr Feltham and Mr Beacham that the hospital believed that the iSOFT product might have some advantages, but their belief was that the Sunquest product would outdistance its rivals in the medium to long-term.  Misys informed WLPC of the contractual situation with iSOFT, namely that the parties recognised the possibility of Misys acquiring something large which had a small (in proportion) UK operation and that this was permitted, however “in such circumstances, iSOFT have effectively the right of first refusal and may buy the UK business at a fair market price”.  
III	Negotiations between Misys and iSOFT
33.	On the day of the press release announcing the acquisition of Sunquest (June 25, 2001) Mr Graham telephoned iSOFT and left a message, following it up with an e-mail to Patrick Cryne, the founder and chief executive of iSOFT, sending him a copy of the press announcement released that morning to explain the background to Misys’ proposed acquisition of Sunquest.  He said that the entire focus behind the acquisition was the United States market, where there should be appropriate benefits in the combination with Medic.  It came with a very small United Kingdom organisation and he said they ought to discuss how best that was dealt with.
34.	On June 27, 2001 Mr Cryne wrote to Mr Graham, referring to clause 11.4, asking him to confirm the total number of employees in the Sunquest Group worldwide and in the United Kingdom, and asking for a copy of the acquisition agreement.  He went on:
“We are keen to commence substantive discussions with you as regards the prospective acquisition by us of that part of the Sunquest business which competes with ACT Medisys.  Although the sale offer provisions in Clause 11.4.2 envisage a post-completion process, we would be willing to move as quickly as necessary to tie in with the timetable for your acquisition of Sunquest.”
35.	On July 4 Mr Graham replied to say that he would welcome a discussion.  Two days later WLPC discussed Europa's possible sale with Mr Kirtland of iSOFT, who was reported as having told them that he could not see any point in iSOFT acquiring Europa except to reduce the opposition.   Mr Graham recorded his view that the value in business would be too high for iSOFT to justify internally and this would ensure Sunquest remained part of Misys, in which case the WLPC would get what it wanted, namely the best product from the best supplier.  Mr Blay, the regional sales director of Europa, was opposed to a sale to iSOFT and on August 6 he expressed the hope that Mr Graham would put “sufficient road blocks” in the way of iSOFT acquiring Europa. 
36.	On August 10 there was a meeting between Misys (Mr Graham, and his corporate development manager, Mr Gaurav Batra) and iSOFT (Mr Cryne, together with Mr Tim Whiston, group finance director) at which Mr Cryne is noted by Mr Batra as saying “Keep UK situation tidy in terms of competitive structure”.  Mr Whiston said that he did not recollect Mr Cryne saying this, although he otherwise accepted the accuracy of Mr Batra’s note.
37.	At the meeting it is clear that it was recognised that in commercial terms the most significant aspect of the acquisition of Europa or its business was the continuation of the arrangements between Sunquest and Europa.  Mr Whiston’s evidence is that at this stage he expressed the view that no value should be attributed to Europa as such, on the assumption that the balance sheet would be “stripped” prior to completion, leaving no assets and liabilities, and on the assumption that a royalty arrangement subsisted under which Sunquest was paid on an on-going basis at a fair market rate for the benefits which Europa derived.  Mr Batra confirms that iSOFT indicated at the meeting that they preferred that the bulk of the consideration be reflected in royalty payments from Europa to Sunquest rather than in a price for the shares.  At the meeting iSOFT indicated that it was looking for a deal similar to that which it had concluded with a US healthcare company, Eclipsys (which involved the acquisition of a licence to use intellectual property belonging to a US corporation).  
38.	On August 13 Mr Blay reported to Medic in the United States, following the meeting with iSOFT: “Gaurav [Batra] and Ross [Graham] are trying to put an offer together based upon fair market value which will hopefully frighten them off.  Of course they may decide that the opportunity is worth going for”.  
39.	Following the meeting of August 10, Mr Batra made enquiries and learned that there were no formal agreements in place between Sunquest and Europa.  Misys prepared a term sheet for the proposed licence to be granted by Sunquest to an iSOFT-owned Europa, with Europa’s obligations to Sunquest to be guaranteed by iSOFT.   
40.	Mr Batra, with Mark Emkjer, the President and Chief Executive Officer of Sunquest, met Mr Cryne and Mr Whiston on September 12, 2001, when the term sheet was discussed.   At the meeting the Misys representatives suggested to iSOFT that from a purely legal point of view their obligations under the Agreement were very limited, i.e. to offer merely the existing UK business to them which had a small number of customers, limited staff and no rights to any of Sunquest’s intellectual property, organisation or support.  But they also told iSOFT that it made sense to discuss whether a bigger distribution-related transaction could be attractive to both parties.
41.	The draft licence tabled by Misys included the following terms: the territory was to be the Restricted Area as defined in the Agreement (exclusive) and the rest of Europe (non-exclusive); the term was to be 7 years (subject to renewal); the licensed products were to be FlexiLab, FlexiRad, and FlexiMed, with a royalty of 50% on the first £20 million of initial licence fees, 45% on the next £10 million, and 40% thereafter, and a royalty of 50% on all recurring licence fees; there was to be a royalty payment in advance of £10 million in respect of the projected royalties in the exclusive territories for the first 3 years of the licence, and £6 million on the third anniversary, and on each subsequent anniversary the preceding year’s advance royalty payment plus 15%.  Europa (as well as iSOFT) was not to deal in competing products.  iSOFT’s position at the meeting in relation to the outline term sheet was that it was interested in exclusive rights to a number of territories outside the Restricted Area on an exclusive basis, but was uncomfortable with the notion of making advance royalty payments while being dependent on Sunquest for product development, and was sensitive (Mr Whiston said in evidence that he described it as “outrageous”) about committing to promote exclusively Sunquest’s products in its market.  Mr Graham said in evidence that Misys wanted to flush out whether iSOFT was serious about promoting the Sunquest products, or really intended to “mothball” it, i.e. use the acquisition to remove a competitive product.
42.	Following the meeting Mr Batra sent an e-mail on September 18 to Mr Whiston expressing the hope that following iSOFT’s review of information about Europa they could proceed quickly to concluding the sale of the business, and attaching a confidentiality agreement.
43.	On September 25 Mr Batra sent a series of documents setting out key information in relation to Europa and inviting iSOFT to submit an indicative offer not later than October 9 to contain a mark-up of the term sheet relating to the proposed licence, the offer price, details of specific terms and conditions, of proposed funding arrangements, proposals for current employees, and due diligence requirements. 
44.	In response Mr Whiston told Mr Batra that iSOFT’s initial valuation of the company had commenced in earnest with a view to establishing a preliminary valuation as soon as practicable.  Whilst broadly happy with the structure of the proposed process,  iSOFT was unlikely to be in a position to submit an indicative offer until October 15, 2001 but shared Misys’ intention to conclude negotiations in November. 
45.	On October 15 iSOFT made a conditional and non-binding offer, subject to contract, of £2.5 million in cash for the whole of the issued share capital of Europa and an exclusive licence to distribute the products in the agreed territory.  There were numerous conditions, including the negotiation of a satisfactory sale and purchase agreement and licence agreement to include all the appropriate warranties and indemnities, and reasonable non-competition, non-solicitation and confidentiality covenants. 
46.	The revised licence term sheet put forward by iSOFT provided for an exclusive licence in the Restricted Area, and a non-exclusive licence for the rest of Europe, Australia, Hong Kong, Singapore, and New Zealand; lower royalty rates than those proposed by Misys, and an advance royalty payment of £2.5 million only.  The letter stated that if Misys were willing to proceed on that basis iSOFT would initiate its due diligence inquiries and instruct solicitors to produce first drafts of the legal documentation required.  The letter ended as follows:
“We believe that the Consideration under the Offer …. represents the fair market value of Europa with the benefit of the proposed licence and that the other terms and conditions of the Offer as described herein and in the enclosed Terms Sheet are fair and reasonable to both parties as required by Clause 11.4.2 of the agreement relating to our acquisition of ACT Medisys.  If there are any aspects of our offer which you do not agree, no doubt you will raise them with use and we can then discuss what changes, if any, might be required to conform to those requirements.”
47. 	In his second witness statement Mr Whiston said that the terms of his offer were derived from alternative models in a spreadsheet analysis which he had done.  But scrutiny of the documents in cross-examination showed that he had approached the valuation exercise on the basis that the value to iSOFT (after payment of royalties) might be between £1 million and £14 million; that iSOFT might have to make advance royalty payments of between £3.5 million and £4.8 million, and that his proposed response as an indicative offer was originally an advance royalty of £3.9 million.  Cross-examination made it clear that the £2.5m offer which he made was simply the figure he agreed with Mr Cryne as an opening shot in negotiations.
48.	On October 17 Mr Batra wrote to Mr Whiston to say that iSOFT’s offer did not meet either their structural requirements nor their fair market value expectations.  Their understanding of iSOFT’s letter was that the £2.5 million for the share capital also represented the advance royalty payment, and that iSOFT had refused to pay non-refundable sums in advance, which would mean that iSOFT would have very little incentive to promote the products.  He stated that in order to extend Europa’s exclusivity beyond the initial 3 years they would need continuing advance royalty payments along the lines set out in the original proposed licence agreement and a commitment from iSOFT to promote exclusively Sunquest’s products.  They ended as follows:
“How we intend to proceed
You have not indicated the desire to buy Europa at fair market value and on terms and conditions that are fair and reasonable to iSOFT and Misys.  Consequently, and consistent with our obligations with the Sale & Purchase Agreement dated 14 December 2000:
1.	We shall invite a small number of other interested parties to bid for Europa on terms broadly similar (and no worse) to those set out above and discussed with iSOFT to date.  If any party puts in an offer on terms that would be acceptable to Misys they will be relayed to you, confidentially (but without identifying the offeror) and you will be given 7 days to match the proposal.
2.	In order for us to progress discussions with you we would need to receive from you a revised offer materially along the lines discussed which are fair and reasonable to both iSOFT and Misys.  This should reach Misys by the close of business on Friday 26th October.”
49.	Mr Batra reported to his colleagues on October 18 that iSOFT’s offer for Europa and its requirements were totally “off the page”, and that Mr Graham and he had agreed that they should park iSOFT while investigating whether Torex would be interested in acquiring Europa.
50.	On October 19, Mr Whiston replied to Mr Batra.  He said that they were clearly some distance apart regarding what constituted fair market value for Europa and what terms and conditions would be fair and reasonable.  The proposed transaction was simply a distribution arrangement without the transfer of intellectual property rights.  The value of the Europa business to iSOFT was derived entirely from the net future trading contribution, after application of an agreed royalty charge.  Their offer was based upon a considered estimate of the future prospects for the Europa business, and not the unrealistic projections provided by Misys.  Mr Whiston suggested that Misys should invite iSOFT and a number of other interested parties to bid for Europa on terms broadly similar, and they believed that that process was the only practical way of implementing the provisions of the Agreement in the context of the situation which had arisen as a result of the acquisition.
51.	On October 25 Mr Batra told Mr Whiston that Misys had opened the process to other prospective purchasers, but did not agree with his suggestions as to how the sale process should be conducted pursuant to the obligations under the Agreement, and told him what approach was being adopted.  He made it clear that if they did not receive any offers which they felt reflected a fair market value they would not feel obliged to sell the business.  Their revised draft of the licence provided for a total of £8.5 million in advance royalties, namely £5.75 million for the first 3 years payable at the outset, and £2.75 million on the third anniversary.
52.	On October 26 Mr Whiston told Mr Batra that iSOFT had not agreed any deviations from the terms of the Agreement, and suggested that Misys’ proposed process did deviate from the Agreement because, in particular, Misys was reserving the right to retain the business even if it received a fair market value offer from iSOFT.  When Mr Batra sent a copy of the letter to Mr Graham he commented that iSOFT’s proposal constituted a free option for iSOFT, or a cynical attempt to shut them out of the market for £2.5 million.
53.	On November 5 Mr Batra wrote to Mr Whiston to say that Misys had offered iSOFT the opportunity to buy Europa and given iSOFT a period of exclusivity, but by virtue of the sweeping changes proposed to the licence agreement and the nil consideration effectively offered, iSOFT had rejected the offer by declining to buy/pay fair market value for the business, and therefore Misys was free to dispose of it on no worse terms than those proposed to iSOFT.  On the same day he wrote to Mr Whiston suggesting a meeting to discuss their respective positions and explore how the proposed sale could be advanced, on a without prejudice basis.
54.	On November 14, Mr Whiston wrote to Mr Batra that their solicitors’ advice was that “the offer which is made must be one which is capable of being accepted and thereby giving rise to a binding contract” and that their solicitors seemed to be in no doubt that no such offer had yet been made.  What had to be offered was that part of the acquired entity which carried on a restricted business, and that was Europa.  So that what ought to be sold was the issued shares of that company and putting in place new licensing arrangements was not permissible, and they should be informed what licensing arrangements were in place between Sunquest and Europa at the time when Misys had acquired Sunquest. 
55.	There was then a meeting, following which Mr Whiston wrote on November 19 to Mr Batra recording that Mr Batra had said that there was no formal written licence agreement in place between Sunquest and Europa and expressing the view that it should not be too difficult to determine the core terms of the licensing arrangements.  Once they had established what constituted the Europa business as at the day of completion they would hope that they could then proceed quickly to finalise the acquisition of Europa.
56.	On December 7 Pinsents wrote to Misys and to Holdings on behalf of iSOFT setting out their contentions as to what should happen under clause 11.4.2.  It required that an offer be made of the target business as it existed at completion of the acquisition of Sunquest (and not a new package assembled by Misys), for a consideration equal to the fair market value, and other terms which were fair and reasonable, and capable of being accepted and thereby giving rise to a binding contract.  In particular, a requirement that Europa’s products be promoted as the “sole like products” would not be fair and reasonable.  On December 10 Allen & Overy wrote on behalf of Misys to say that their client’s position was that it had complied with the process set out in the Agreement, that iSOFT had declined to purchase Europa and that the process was terminated.
57.	On December 12 Mr Batra wrote to Mr Whiston: “Critical to the entire process is of course the terms of the licence.”  He said that they believed that they had carried out the process in accordance with the terms of the Agreement, and to the extent they had applied the process in ways with which iSOFT now disagreed, they did so at the request or upon the agreement of iSOFT.  He set out, by reference to the term sheet, the licence arrangements between Sunquest and Europa at the date of Misys’ acquisition, which (as I have indicated) amounted to little more than the practice with regard to the amount of royalty and the territory of operation.  In reply, on December 18, Mr Whiston recognised that for a deal to take place it would be necessary for there to be a formal licence, “but the issue between us is over what would constitute ‘fair and reasonable’ terms for that licence.” He also said that the process had not been carried out in accordance with the Agreement because Misys had “not made an offer capable of acceptance, since the price proposed by [Misys] is far in excess of ‘fair market value’ and the terms proposed are not fair and reasonable as between the parties.”	
58.	On December 20, Misys made a further detailed proposal: the consideration was to be £5 million, with the buyer being able to set off against that sum the first £2.5 million of royalties.  On January 3, 2002 iSOFT requested information and documents to enable it to evaluate the offer.  On January 22 and February 6, 2002 Misys provided further information, as well as an update on Europa and recent developments in winning new business, which told iSOFT that Europa was about to be awarded the WLPC contract.
59.	On February 20 iSOFT made its own revised offer.  The consideration was to be a sum equal to the net assets of the business, and there was to be a guaranteed minimum royalty of £5 million.  But it did not say anything about an advance royalty payment.  On March 1 Mr Batra marked up iSOFT's term sheet to provide that an advance minimum royalty of £5 million would be paid on completion.  In his covering letter to Mr Whiston, Mr Batra said that he had made it clear that Misys would view the letter as putting finally to bed any outstanding arguments in relation to clause 11.4.  His suggestion was a sentence by which iSOFT confirmed that they accepted that Misys’ entry into the agreement and compliance with its terms constituted full compliance of obligations, if indeed any remained, under clause 11.4. 
60.	iSOFT made a revised offer on March 8, accepting some of Misys' proposals, but leaving the timing of royalty payments until completion of due diligence.  The offer was said to be without prejudice to its rights under clause 11.4.2.  On March 14 Misys said that it would not enter negotiations with the threat of litigation if for any bona fide reason they could not agree final terms, but suggested further discussion, if necessary on a without prejudice basis.
61.	By the time the negotiations broke down, the position of the parties on the main points at issue (most of which related to the proposed licence) may be summarised as follows:
(a)	there was agreement on the products to be licensed: FlexiLab, FlexiRad and FlexiMed;
(b)	the territory: the negotiations extended beyond the Restricted Area as defined in the Agreement: they encompassed exclusive rights in the Restricted Area, and non-exclusive rights in other areas: for the latter, Misys proposed Europe and iSOFT suggested Australia, Hong Kong, Singapore and New Zealand; on December 20 Misys proposed that the non-exclusive territories be Europe (other than those in the Restricted Area) and the Middle East.  iSOFT’s February 20 proposal was exclusive rights in the Restricted Area plus the Scandinavian countries, and non-exclusive rights for the rest of Europe, and that was agreed;
(c)	consideration for the share capital of Europa: iSOFT’s offer on October 15 was £2.5 million in cash for the share capital and the licence; on December 20 Misys suggested £5 million in cash at completion, and that iSOFT would be able to off-set against this the first £2.5 million of any royalties; on February 20 iSOFT suggested a consideration equal to the net assets of the business, and that became the agreed position;
(d)  advance royalty payments: Misys’ opening position was that there should be £10 million at the outset and £6 million on the third anniversary, and on each subsequent anniversary of the licence, the preceding year’s advance royalty payment plus 15%; iSOFT’s opening position was that £2.5 million should represent the consideration for the share capital as well as an advance payment for the first 3 years.  Ultimately iSOFT offered a guaranteed minimum payment of £5 million covering the first 3 years (but without any provision for an advance payment); Misys agreed, subject to it being paid in cash on completion, but iSOFT wanted to leave the precise timing to be discussed, and that remained open;
(e)	term of licence: 7 years was agreed;
(f)	royalty rates: Misys’ position was that the appropriate royalty was 50% of the licence fees received by Europa; iSOFT initially proposed lower rates, but 50% was later agreed;
(g) 	obligation to promote Sunquest products as the only like products: initially this was required by Misys and not agreed by iSOFT; on December 20 Misys proposed that from March 1, 2004 for the remainder of the 7 year term, Europa’s rights in the exclusive territories would remain exclusive for such time as Europa promoted the products as its primary like products for new business, but ultimately it was agreed that iSOFT’s retention of exclusivity in that period would be dependent on maintaining an agreed minimum royalty.
IV	The dispute
62.	The WLPC contract was signed on March 12, 2002.  The contract was with Europa, whose performance was guaranteed by Sunquest.  Press releases were issued by the WLPC on the same day stating that the contract had been awarded to Misys Healthcare Systems (formerly Sunquest Information Systems), a division of Misys, and by Misys on March 18, which stated that “Misys plc – Britain’s largest independent applications software provider – has signed an agreement to supply five leading London hospitals” with its software.
63.	On April 12, 2002 Pinsents on behalf of iSOFT claimed that in view of the press release, Misys had been carrying on the Restricted Business in breach of clause 11.2 in entering into the contract, and by allowing Europa to use the Misys brand and logo at trade exhibitions Misys was assisting Europa to carry on a Restricted Business in breach of clause 11.2.1.  When Allen & Overy replied to say that the WLPC contract was in the name of Europa, Pinsents maintained the position that in any event Misys was assisting Europa in breach of clause 11.2.1; and also claimed that Misys was in breach of clause 11.4.2, because (a) Misys had made no offer capable of acceptance so as to give rise to a binding contract; (b) in any event the terms suggested by Misys never came near to satisfying the requirement that the offer be at “fair market value” and on “fair and reasonable terms.”  They accused Misys of stringing along iSOFT in negotiations which Misys had no intention of carrying to fruition. 
64.	Proceedings were commenced on April 25, 2002.  On May 1 Laddie J ordered that the trial be expedited on or as soon as possible after June 17.  On May 28 Jacob J ordered that the trial should not deal with any issue of damages or any issue which the trial judge was satisfied required expert evidence to determine.  The trial opened before Lightman J on June 28, when he expressed the view (inter alia) that the effect of clause 11.4.2 was that if the business were not sold to iSOFT or to a third party then it had to be closed down. 
 65.	He also suggested that mediation might resolve matters, and adjourned the trial to the following Monday, July 1.  The mediation failed.  The judge’s construction, requiring closure of the target business if not sold to iSOFT or another buyer, was contrary to the pleaded cases of both parties.  In those circumstances, by the time the trial resumed on July 5, Misys had raised a new issue on the closure issue, saying that if it was correct, the whole of clause 11 was void either as an unreasonable restraint of trade or because it was in breach of European and UK competition law.  Furthermore, forced closure of the business would have a very serious adverse effect on the running of hospital services.  The trial was adjourned for a fortnight with directions for further statements of case and skeletons, but the closure issue was resolved between the parties and they agreed in a deed of variation executed on July 17, 2002, that Lightman J’s provisional view was not the intention of clause 11. 
66.	The deed of variation makes it explicit that if iSOFT declined to buy the Target Business, the Restricted Person would be free to dispose of it or to retain it.  The variation was not intended to have any effect on the dispute except that it was to mean that the “closure construction” was not open to and would not be contended for by any party.  The parties stated their intention that the freedom to retain a Target Business becoming express in the variation rather than implicit was not to be taken into account by the court in deciding which of their competing constructions in the action was correct.  
67.	It was in those circumstances that the adjourned trial resumed before me on July 21.

V	The issues under clause 11.4.2: the construction and enforceability of the obligation to “offer to sell … for a consideration equal to the then fair market value … and otherwise on such detailed terms and conditions which are fair and reasonable …”

68.	The parties have identified a number of separate issues which arise under this head, the most important of which for present purposes are these: the meaning of the first sentence of clause 11.4.2, and in particular whether it requires that the offer should be capable of acceptance so as to give rise to a contract for the sale of the Target Business; whether it is sufficiently certain to be specifically enforced, and whether the court can now supply the machinery to determine the fair market value and other terms and, if so, what that machinery should be.  Subsidiary issues are the identification of the relevant Restricted Person, and of the Target Business (including the question of what distribution and licensing arrangements between Sunquest and Europa it included).
69.	It is accepted that, if issues as to the fair market value of the business and the fair and reasonable terms and conditions of the contract of sale arise, they are not matters for determination at this stage. 
70.	There are in addition the following issues: whether in any event specific performance would be an appropriate remedy; whether iSOFT has waived the right (if any) to require (or is estopped from requiring) that the offer be one which is capable of acceptance.
71.	The critical (but by no means the only) question is whether, on its true construction, the opening sentence of clause 11.4.2 required the making of an offer capable of acceptance.  Misys accepts that no entity in the Misys group made such an offer. iSOFT accepts if the word “offer” means nothing more than a non-binding indication of a willingness to sell, it would inevitably be void for uncertainty as a mere agreement to negotiate.  Misys says that even if the clause did have the meaning for which iSOFT contends (a) it is too uncertain to be enforced; and (b) in any event, specific performance is not an appropriate remedy.
VI	Legal principles: uncertainty of terms
72.	Uncertainty of terms can arise from a number of factors.  The parties may be reluctant to raise difficult issues for fear that the transaction might fall through.  Or they may be reluctant to commit themselves to a rigid long-term arrangement, particularly when prices and other economic conditions are likely to fluctuate.  Or they may recognise their inability at the time of agreement to foresee all of the problems that may arise. They sometimes attempt an element of flexibility by providing that certain terms are to be agreed later, or from time to time.  In particular, in the case of contracts which require performance over a period (though not necessarily, as this case shows, a very long period) the parties may envisage negotiations over terms which have not been spelled out in full at the time of the agreement.  Although they may expect that they will reach agreement, what they expect to happen if they fail to reach agreement may be unclear.  They may be taken to have understood that there will be no agreement at all or they may understand that there will be an agreement with the missing terms implied or established by machinery to be supplied.
73.	The agreement of the parties may be so incomplete and lacking in certainty that the court will not be able to fill the gaps.  In principle the court will not make a contract for the parties if the terms of what they have agreed are indefinite or unsettled, or, as is sometimes said, they have merely made an agreement to agree: May and Butcher v. R [1932] KB 17n; Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503, 512-514 (H.L.); Scammell v. Ouston [1941] AC 251, 273.  A recent example is UYCF Ltd. v. Forrester, December 8, 2000 (CA), where a covenant to erect “a permanent office building in accordance with the specification contained in a letter of even date … annexed hereto” and where the specification was not in fact annexed, was held to be unenforceable because the court could not elicit with sufficient certainty what bargain the parties had made or intended.  In Gillatt v. Sky Television Ltd  [2000] 2 BCLC 103 a reference to “open market value” of shares in a private company (to be determined by an independent chartered accountant) could not provide the court with adequate objective criteria for the court to determine the value of the shares.
74.	One example of an agreement which is unenforceable for uncertainty is an agreement to agree.  In English law (although the position is different in some other systems such as the United States) an agreement to negotiate is not enforceable, because it is too uncertain to have any binding force: Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503,  515; Courtney & Fairbairn Ltd v. Tolaini Bros. (Hotels) Ltd [1975] 1 WLR 297, 301;  Walford v. Miles [1992] 2 AC 128.  But a provision which is otherwise capable of being given some objective content may be enforceable even if the parties have provided that it is “to be mutually agreed” on the basis that the provision for mutual agreement is mere machinery, and can simply be disregarded: Didymi Corporation v. Atlantic Lines & Navigation Co Inc [1998] 2 Lloyds Rep 108.
75.	But to hold that a contract or contractual term is unenforceable for uncertainty is a matter of last resort.  The court will not do so unless it is driven to do so in circumstances where no reasonable construction can be put on it which will make it enforceable.  In Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503, 514, Lord Wright said: “It is the duty of the court to construe [commercial] documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat.  That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail.”
76.	The starting point is the rule that in each case it is a question of the true construction of the agreement, and the relevant terms will be construed, if at all possible, to give them the necessary certainty: Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503, 512, 514, 517.  Particularly where a contract has been partially executed (especially in a commercial contract over a long period) there is a very strong tendency for the courts to imply any reasonable term so as to give effect to their intentions.
77.	Consequently, where the contract fails to specify the price or provide for a price mechanism, the court may hold that the parties contracted for a reasonable price: Foley v. Classique Coaches Ltd [1934] 2 KB 1; Mamidoil-Jetoil Greek Petroleum Co SA v. Okta Crude Oil Refinery [2001] EWCA Civ 406, [2001] 2 Lloyds Rep 76.  Or where the quality of the goods has not been specified the court may imply a term relating to the quality standard of the goods, and may even (with the assistance of expert evidence) determine a fair and reasonable distribution of instalment deliveries: Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503.  Or where they have not specified quantities, the court may hold that a reasonable number is to be supplied: F&G Sykes (Wessex) Limited v. Fine Fare Ltd [1967] 1 Lloyds Rep 53.  In some cases the court has relied on the presence of an arbitration clause as supporting the enforceability of what might otherwise be regarded as an uncertain term: Foley v. Classique Coaches Ltd [1934] 2 KB 1; F&G Sykes (Wessex) Ltd v. Fine Fare Ltd [1967] 1 Lloyd’s Rep 53; Didymi Corporation v. Atlantic Lines & Navigation Co Inc [1998] 2 Lloyd’s Rep 108.
78.	So also, where an agreement which would otherwise be unenforceable for want of certainty or finality has been partly performed so that the intervention of the court is necessary in aid of a grant that has already taken effect, the court will strain to the utmost to supply the want of certainty even to the extent of providing a substitute machinery: Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444, 484, per Lord Fraser of Tullybelton, approving Templeman LJ ibid, at 460.  Thus where the parties provide for a sale at a valuation and do not specify machinery for determining it (or where the machinery is defective), the court may construe the agreement as being for a sale at a fair and reasonable price, and then ascertain the price itself.  
79.	In Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444, there was an option in leases to purchase the freehold reversion at such price not being less than a specified figure (£12,000 in one of the leases) as might be determined by two valuers, one to be nominated by the less or and the other by the lessees, or in default of agreement by an umpire nominated by the valuers.  The option was exercised.  The lessors refused to nominate their valuer.  It was held in the House of Lords that specific performance of the contract of sale and purchase arising on the exercise of the option could be granted: (a) on its true construction the option was for the purchase at a fair and reasonable price, and there was therefore a contract for sale and purchase on its exercise; (b) the procedure for valuation was machinery which was a subsidiary and non-essential element, and therefore the court could itself ascertain the fair and reasonable price.  By contrast, in Gillatt v. Sky Television Ltd  [2000] 2 BCLC 103 the sale agreement provided for payment of 55% of the open market value of shares in a private company as determined by an independent chartered accountant.  Neither party had taken steps to appoint the accountant and it was held that the reference to the accountant for determination was an essential element of the parties’ bargain, and the reference to “open market value” could not provide the court with adequate objective criteria for the court to determine the value of the shares.
80.	Uncertainty of terms will be a bar to specific performance (Douglas v. Baynes [1908] AC 477), and this is so even in cases where it might not be a bar to an award of damages: Tito v. Waddell (No. 2) [1977] Ch 106, 323.  The court must be able to spell out with precision what the defendant must do, although a degree of imprecision may be permissible if the claimant’s merits are strong:  see Tito v Waddell (No 2) [1977] Ch. 106 at 322-3; Co-operative Insurance Society Ltd v Argyll Stores [1998] AC 1, 14. 
VII	The position of the parties
81.	The argument for iSOFT on the principal issue is this.  The Agreement is a commercial agreement for the sale of shares, which has been completed (both with the transfer of the shares and the payment of the completion monies of £25m, subject to adjustment).  The purpose of clause 11.2 is the protection of the goodwill of the business whose shares were being sold.  The value of the restrictive covenants was reflected in the price iSOFT paid for ACT.  Clause 11 was obviously intended by the parties to have contractual effect.  In the absence of a legal obligation to offer the Target Business for sale to iSOFT, this commercial purpose cannot be achieved.  
82.	The language of the first sentence is in the classic terms which would be expected in a contractual right of this kind (i.e. an option).  Clause 11.4.2  imposes requirements as to the amount of the consideration, namely one “equal to the then fair market value” and requirements as to the other terms and conditions, namely that they should be fair and reasonable to both iSOFT and Misys.   
83.	The word “offer” is one with a well recognised and understood meaning – it means an offer which is capable of being accepted so as to give rise to a contract.  This is particularly so in the context (1) where the word “offer” is part of the phrase “offer to sell” and (2) the phrase is part of a clause giving to iSOFT the opportunity to purchase that part of the acquired entity carrying on a Restricted Business as part of the wider scheme of making the clause 11 restrictions work.  
84.		Despite the complete absence of machinery by which to fix the fair market value there would be certainty of terms and therefore a complete and enforceable contractual obligation.  Expressions such as “fair market value” which require determination by an objective standard have always been regarded as certain, even in the absence of machinery for determination, and the Court would supply machinery to fix the price according to the agreed formula: Sudbrook Trading Estate Ltd v Eggleton [1983] AC 444 at 483.  
85.		The three remaining sentences of clause 11.4.2 do not make any difference to the conclusion that clause 11.4.2 is a complete and enforceable contractual obligation.  The second sentence is entirely neutral.  iSOFT accepts that an agreement to negotiate in good faith is not an enforceable obligation and the second sentence was therefore no more than a statement of intent.  It states no more than what must have been the expectations of the parties – if iSOFT wanted to acquire the Target Business, the parties would negotiate in good faith to agree and complete the sale as soon as is practicable.  The second sentence does not answer the question of what the position would be if the parties could not agree.  This must depend on whether there existed any obligation (outside this sentence) and, if so, what it was.  The second sentence does not detract in any way from the principal obligation found in the first sentence, which is quite separate from it.  The sentences are not combined to read “to offer for sale at the fair market value which is agreed between the parties in good faith negotiations”.  The obligation in the first sentence is unambiguously to procure the offer for sale at fair market value.  The second sentence is not an integral and indispensable part of the price fixing mechanism. 
86.	The third sentence tends to suggest that there must have been an offer, for it provides a mechanism to obtain the necessary information to consider the offer.  It also tends to confirm that iSOFT was entitled to time to consider the offer.
87.	The fourth sentence is neutral.  It is directed toward what happens if iSOFT declines to buy the Target Business.  It permits a disposal on no worse terms than those proposed or negotiated with iSOFT or, in the absence of a proposal by the relevant Restricted Person (which must be because iSOFT indicated no interest in acquiring), on terms no worse than the fair market value.  Use of the words “proposed” and “negotiated with” cannot be read in isolation from the previous sentences.  “Proposed” must be referring back to what was offered in the first sentence.  “Negotiating with” must be referring to what, if anything, resulted from negotiations (second sentence).
88.	If the relevant Restricted Person does not make an offer which is capable of acceptance, then the court may fashion an appropriate order after making such enquiries as may be necessary to ascertain the fair price: Sudbrook Trading Estate Ltd v. Eggleton [1983] 1 AC 444; cf Talbot v. Talbot [1968] Ch 1.  It also, says iSOFT, has the power to fashion a contract containing fair and reasonable terms and conditions by analogy with the power of the court to settle the form of a conveyance or lease or other instrument by which a contract whose specific performance has been ordered is to be completed. 
89.	The position of Misys is as follows.  The court's task is to determine what the parties meant from the language which they have used.  Clause 11.4.2 as a whole reflects the outline of a process readily recognisable to businessmen, but it is an outline only: it envisages an offer, indication of wish to buy, negotiations, due diligence, contract. 
90.	The stages in the process are:	(a) Misys makes an offer to sell the Target Business (first sentence).  It indicates a willingness to sell at fair market value and on detailed terms and conditions fair and reasonable to both parties.  It may (although it is not obliged to) specify the consideration and terms and conditions which it believes to be fair. (b) If, in response to the offer, iSOFT wishes to acquire the Target Business: it gives an indication to that effect (second sentence). (c) Good faith negotiations to agree and complete the sale take place, so as to establish an agreed price and detailed terms and conditions  (second sentence). (d) Before or during the negotiations, Misys provides information and documents and gives access to information, property and personnel (third sentence). (e) If iSOFT declines to buy the Target Business (either at the outset or at some later stage), Misys can sell it to a third party or retain it (fourth sentence).
91.	The second and fourth sentences describe alternative responses to the offer in the first sentence.  The words  “if the Buyer indicates that it wishes to acquire the Target Business” are not in the language of acceptance of an offer so as to create a contract. If a contract was to be made simply by acceptance of an opening offer, there would be nothing to negotiate about in accordance with the second sentence.  “Offer” in the third sentence and “proposed/proposal” in the fourth sentence are references back to “offer” in the first and third sentences. “Negotiated” in the fourth sentence is a reference back to the second sentence.  The provision of documents and information under the third sentence, stipulated to follow the making of the offer, is clearly designed to enable iSOFT to negotiate over its terms.  The fourth sentence refers, in a reference back to the first sentence, only to what has been “proposed” and to a “proposal” and to a proposal which might not even have stated the consideration.
92.	The essence of 11.4.2 is negotiation over “detailed terms and conditions”.  The parties cannot have thought a contract would ever be made in any other way. 11.4.2 itself contemplated that the negotiations might be unsuccessful: it contemplated iSOFT declining to buy during the negotiation process (4th sentence).  Both parties were advised by experienced commercial solicitors (Pinsents and Ashursts for iSOFT; Allen and Overy for Misys), who may be taken to have known that an obligation to negotiate was not enforceable as a stand-alone contract.  If the parties wanted to oblige Misys to sell the Target Business, or wanted to set a mechanism for such a result, they would have done so, as they did in the case of the adjustment to the purchase price, and with regard to sharing damages obtained from a landlord for wrongful refusal of a licence to assign.
93.	If clause 11.4.2 requires an offer capable of acceptance, then it is too uncertain to be enforced.  The court will not write the terms of a complex business agreement.  The court will only contemplate intervening if there is a concluded agreement on the fundamentals of the contract, where all that remains is to provide a machinery by which secondary details can be implemented.  Clause 11.4.2 does not contain the fundamentals of a concluded agreement, or even itself amount to an agreement to sell.  The Sudbrook principles are inapplicable if the essence of the agreement between the parties is that the unspecified terms of the contract are a matter for negotiation and agreement between them.  Sudbrook only applies when the Court finds that the parties intended those terms to be ascertained by use of objective criteria.  But in this case the essence of the Agreement is that the terms of the sale are to be reached by negotiation.
VIII	Injunction aspects
94.	The issue on this aspect of the case is a narrow one.  The restrictions in clause 11.2 apply for a period of 3 years from completion of the Agreement (February 5, 2001).  They require Holdings (1) not to do the acts specified and (2) to procure that no other Restricted Person will do the acts specified.  Those acts are:
“in any capacity whatsoever directly or indirectly carry on or assist in carrying on or be engaged, concerned or interested in any activity or undertaking which is the same as, or substantially similar to, the business of [ACT or any of its subsidiaries] as carried on at the date of this Agreement or at Completion (“Restricted Business”) within the Restricted Area” (clause 11.2.1).
95.	But nothing in clause 11.2.1 is to prevent “any Restricted Person from acquiring any interest in any entity which carries on a Restricted Business in the UK provided that” (a) the number of employees employed in the UK in the Restricted Business does not exceed 20% of the total number of employees employed in the entity acquired; and (b) the clause 11.4.2 procedure is implemented. 
96.	The facts are not, or are no longer, substantially in dispute, and are set out above in section III.  Misys accepts that the group’s activities amount to assisting Europa in carrying out its business.  It points out that on at least two occasions (September 18, and December 12) Mr Batra told Mr Whiston that Misys would continue to manage the business actively, including the pursuit of sales leads) and that Mr Whiston took no objection.  Misys and Sunquest personnel assisted Europa in securing the WLPC contract, and Sunquest guaranteed Europa’s obligations under the contract. Europa solicited business for Sunquest products at trade fairs in Harrogate and Dublin under the Misys Healthcare Systems brand-name and logo.  Europa is now part of Misys Healthcare Systems and is required and entitled to present and promote itself as such.  Sunquest directors were appointed to the board of Europa. 
97.	What is said by iSOFT is that clause 11.2 cannot prevent Holdings or any other Restricted Person from being “concerned or interested” in the entity in question, but that the exception does not go further.  In particular, it does not grant permission for Holdings or any other Restricted Person itself to engage in or carry on the activity of the acquired entity.  It does not grant permission for Holdings or any other Restricted Person to assist (in any capacity and whether directly or indirectly) in the carrying on of the Restricted Business.
98.	iSOFT says that clause 11.2 contains five sets of restrictions preventing any Restricted Person from: (a) carrying on or assisting in carrying on Restricted Business (clause 11.2.1); (b) soliciting customers (clause 11.2.2); (c) doing anything that has the effect of causing anyone who is in the habit of dealing with  ACT to be unable or unwilling to deal on terms of previous dealings (clause 11.2.3); (d) soliciting employees (clause 11.2.4); (e) using ACT’s intellectual property (clause 11.2.5).
99.	Clauses 11.3 commences with the words “Nothing in clause 11.2 shall prevent…”. Specific conduct is then identified that would otherwise be prevented by clause 11.2, namely the buying of listed shares (up to a maximum of 5%).  An identical approach is adopted in clause 11.4, which begins with the words “Nothing in clause 11.2.1 and 11.2.2 shall prevent…”   The clause does not seek to dis-apply clause 11.  Again, specific conduct is identified as being not prevented, namely the acquisition of an entity which carries on a Restricted Business in the UK, which would be otherwise prevented.
100.	iSOFT accepts therefore that Europa as the Target Business was to be free to carry on its business in the ordinary way.  This is implicit in clause 11.4.2.  But this does not lead to the conclusion that there is any wider permission for any other Restricted Person to assist Europa in carrying on its business.  Such a conclusion would conflict with the opening words of clause 11.4 and is not in any sense necessary to give efficacy to the Agreement.
101.	Misys says that the business of Europa has been continued in the ordinary way of business and that Misys group members have done nothing more than is normal for parent and other group companies to do, and that it is explicitly or implicitly permitted by clause 11.4.  Clause 11.4.2 expressly provided for the continuation of a Restricted Business by or through the Target Business; or that there is an implied term that the acquired entity and the Target Business would carry on the business in the ordinary course, and that the Target Business and the relevant Restricted Person would maintain the ordinary relationship of a business and its owner, and (where applicable) of parent and subsidiary, and accordingly the relevant Restricted Person, the acquired entity and the Target Business were permitted to carry on, assist in carrying on, and be engaged, concerned or interested in a Restricted Business in the UK.  All of the steps taken by Misys, Sunquest and Europa have been taken in the ordinary course of business and as part of the ordinary relationship between them.  
102.	As regards remedy, iSOFT says that an injunction is the usual means of enforcing restrictive covenants in a situation such as this.  Damages are not an adequate remedy for iSOFT.  By assisting Europa to carry on its business Misys is creating a far more potent rival in the laboratory market in which iSOFT operates.  The adverse consequences of such enhanced competition would be very difficult to evaluate in terms of damages.  Misys says that any order by way of purported enforcement of 11.2, while Europa is to continue to trade (as it must), would be impossible to police, unclear in its terms and effect and inevitably productive of further hostile and disruptive litigation, to the prejudice of all participants (including iSOFT, whose reputation would suffer) and third parties (including NHS hospitals).  Given the reality of the integration between Europa and its parent, it would seem impossible for the Court to spell out clearly what a Misys officer can or cannot do in respect of Europa (were Misys to retain the business), let alone to police it. 
103.	Misys says that the draft order submitted by iSOFT only serves to show the difficulties of iSOFT's injunction case.  For example, the order nominally accepts that Europa can trade ordinarily, but then seeks to prevent its parent, Sunquest from assisting it in doing so, other than by supplying product.  Given what is known about Sunquest’s normal level of assistance to Europa in the ordinary course of its business, it is plain that this term of the order goes far beyond even the entitlement iSOFT seeks to assert; it forbids financial assistance from Misys or Sunquest to Europa, although this is a normal function of a parent, and does not explain what might or might not constitute financial assistance; it seeks to prevent Misys or Sunquest from providing personnel to manage Europa – without explaining whether this includes having directors on its board (who must discharge their responsibilities properly).
IX	Conclusions 
Uncertainty of terms
104.	I heard evidence from Mr Whiston, Mr Graham, Mr Batra and Mr Blay.  Very little of it was admissible on the principal points which arise for decision at this stage, but I will make some comments about it.  To the extent that the cross-examination of Mr Graham and Mr Batra was directed to their good faith or the reasonableness of their proposals, those matters are not relevant either at all, or at this stage.  In the course of correspondence Pinsents confirmed on behalf of SOFT that the particulars of claim pleaded no case of bad faith against Holdings or Misys.  The reason for the absence of such an allegation was said to be that the obligation to negotiate in good faith was not one which was contractually enforceable, but iSOFT did not accept that Holdings and Misys had acted in good faith.  I found them Mr Graham and Mr Batra (and Mr Blay) helpful and credible witnesses, and I heard nothing which would lead me to doubt that they were throughout acting bona fide in a genuine effort to sell the business on the terms most advantageous to Misys. 
105.	Mr Whiston’s evidence was less satisfactory.  In particular, I found it incredible that a public company, with a chartered accountant as its finance director, would have so little internal documentation in relation to the negotiations.  But since nothing turns on the lack of documentation, it is not necessary to dwell on this aspect.  I would add that, in the light of the correspondence and having seen Mr Whiston in the witness box, I have some doubt whether iSOFT has been serious about the negotiation process, and have some concerns as to whether these proceedings are mainly tactical in nature, designed to force better sale terms from Misys against a threat of ruining the business by denying the Misys group the right to support it.
106.	It was plain from Mr Whiston’s evidence that he did not understand the legal implications of the arguments being put forward on behalf of iSOFT.  He accepted that the conditions in his letter of October 15, 2001 concerning negotiation of a satisfactory sale and purchase agreement and licence agreement to include all appropriate warranties and indemnities etc were “absolutely fundamental” steps in reaching a deal for the sale of the business.  But in his first witness statement, made on April 24, 2002, Mr Whiston described his intention in making the offer of October 15 as being to give Misys “an idea of the sort of offer we would consider fair if it were made to us”, and he repeated this formula in his second witness statement of June 6, 2002, but he added: “In adopting this approach, we were looking at the commercial benefits and opportunities of the situation in the round rather than considering solely our entitlement under the Agreement.” But it was apparent from his evidence in the witness box that what he personally understood by “offer capable of acceptance” was a proposal involving a fair market price and fair and reasonable terms, and not an offer which could be accepted then and there.
107.	iSOFT’s position was developed in a letter of June 19, 2002, from its solicitors in the course of these proceedings.  They said:
“It is not iSOFT’s case that either proposal (ie 15 October 2001 or 20 February 2002) was suggesting the acquisition of Europa’s shares at fair market value or on terms which were otherwise fair and reasonable.  In both cases, the proposals being made related to something outside the terms of the Agreement.  Both proposed that (in addition to the acquisition of the shares of Europa) a new licence would be granted to Europa (for which Clause 11.4.2 did not provide).  The consideration being proposed was for both the shares of Europa and the licence.
It is iSOFT’s case that Holdings was obliged to procure the offer to sell the share capital of Europa to iSOFT for a consideration equal to its fair market value on the relevant date ... and on fair and reasonable terms.  It is not contended that Holdings was obliged to procure the offer to either Europa or iSOFT of a new licence.
Whilst iSOFT was only entitled to acquire (and Holdings was only required to procure the offer for sale of) the share capital of Europa, it obviously made commercial sense for iSOFT and Misys to investigate the possibility, outside the terms of the Agreement, of Europa being granted a new licence by Sunquest, following its acquisition by iSOFT.  The letters of 15 October 2001 and 20 February 2002 were accordingly written on this footing and thus did not contain proposals which, if made by Holdings, would have complied with its obligations under clause 11.4.2.
A valid offer would have been one which offered the shares of Europa to iSOFT at a fair market value and otherwise on terms which were fair and reasonable to both parties.  Such offer might either have been at a particular sum or for a consideration to be determined by a formula.
...
As explained above, a new licence is not a component of any sale contemplated under clause 11.4.  Whilst it might make commercial sense for a new licence to be negotiated between Sunquest and Europa, any such licence would be outwith the Agreement and accordingly, is not something which either party could insist upon or which the court can be asked to adjudicate on.”
108.	But Mr Whiston in the witness box was unable to support this approach.  He said more than once that the terms of the licence would have to be documented for the purposes of a sale.  But I have already expressed the view that this evidence is of no assistance on the principal point.  If the legal argument is right, then it does not matter if the client does not understand it.
109.	My conclusions are as follows.  The phrase in the first sentence “the Seller shall procure that relevant Restricted Person” has the same meaning as the phrase in the second sentence “the Seller shall procure that the relevant Restricted Person.  The omission of the word “the” in the first sentence is accidental and both sentences refer to the entity which Holdings can procure to make the offer.  iSOFT’s position is that the relevant Restricted Person is Sunquest, because Sunquest is the entity which is in a position to sell the shares in Europa.  Misys’ position is that it is Misys because “the relevant Restricted Person” is the “Restricted Person” which makes the acquisition triggering clause 11.4.2 and the Restricted Person which acquired the interest in the UK business through Sunquest was Misys. 
110.	Nothing turns on the question whether the relevant Restricted Person which is to make the offer under the first sentence is Holdings or Misys or Sunquest (or Europa).  Each of them is comprised within the definition of Restricted Person in clause 11.1.  I consider that on this point the relevant Restricted Person is the entity which is in a position to sell the Target Business.  Both parties agree that the Target Business is that of Europa, although there is a fundamental disagreement on the role of the Sunquest licence in that process.  I will proceed on that basis, although I consider it likely that the Target Business is the business of Sunquest/Europa in the Restricted Area, and that if Denmark and the Middle East were to be excluded (as it is arguable that they should be), then the sale would be by Europa of its business in the Restricted Area.  I will revert to this point below.
111.	The relationship between the wording of the instrument and the factual background was authoritatively stated by Sir Thomas Bingham MR in Arbuthnott v. Fagan [1996] Lloyd’s Reinsurance LR 135, at 139:
“Courts will never construe words in a vacuum.  To a greater or lesser extent, depending on the subject matter, they will wish to be informed of what may variously be described as the context, the background, the factual matrix or the mischief.  To seek to construe any instrument in ignorance or disregard of the circumstances which gave rise to it or the situation in which it is expected to take effect is in my view pedantic, sterile and productive of error.  But that is not to say that an initial judgment of what an instrument was or should reasonably have been intended to achieve should be permitted to override the clear language of the instrument, since what an author says is usually the surest guide to what he means.  To my mind construction is a composite exercise, neither uncompromisingly literal nor unswervingly purposive: the instrument must speak for itself, but it must do so in situ and not be transported to the laboratory for microscopic analysis.”
112.	I do not consider that the parties to the Agreement could reasonably be taken to have envisaged that the clause 11.4.2 process would have begun with the presentation to the buyer of a full grown offer capable of acceptance so as to create an immediately binding contract (i.e. with nothing other than the buyer's signature required to conclude an agreement), and it would not occur to a businessman that it should.  That conclusion is based on the wording of the clause as a whole in the context of the Agreement as a whole, and against its background.  
113.	I am satisfied that the structure of clause 11.4.2 confirms that the word “offer” in the first sentence does not mean “offer capable of acceptance.”  In my judgment it means an indication by Misys of a willingness to sell at a fair market value and on terms and conditions which are fair and reasonable to both parties.  If it means offer in the sense of indication of willingness to sell, then the rest of the clause hangs together and makes sense.  After an offer in this sense, iSOFT may indicate that “it wishes to acquire” the Target Business. 
114.	This is the natural reaction to an indication of a willingness to sell, and contrary to the idea that it was envisaged that prior to this process iSOFT might accept the offer so as to create a concluded contract.  All that is envisaged is that iSOFT and the relevant Restricted Person shall negotiate in good faith to agree and complete the sale.  In the course of that process Holdings procures that all documents and information necessary to enable iSOFT to consider “the offer and the business and assets the subject of the offer” are made available.  There is no reason to conclude that the word “offer” is used in a different sense here from that in the first sentence.  The third sentence makes complete sense in the context of a negotiation.  It makes little commercial sense in the context of iSOFT considering a full offer capable of acceptance.  The fourth sentence speaks of freedom to dispose of the Target Business on no worse terms than those “proposed” or “negotiated” with iSOFT.  The word “proposed” is consistent with proposals made in the context of a negotiation and does not fit with a process beginning with a firm offer capable of acceptance.  This is also strikingly supported by the fact that the fourth sentence envisages that the final stage may have been reached without a proposal by the Restricted Person in relation to the consideration.
115.	That conclusion is confirmed by, but can be independently reached through, the relevant background features.  Both Misys and iSOFT had considerable experience of the acquisition of companies, and knew that in the case of the acquisition otherwise than by an offer for the shares of a publicly quoted company, the process involves detailed negotiation not only on price, but also on such matters as detailed warranties and indemnities.  Both parties were advised by experienced and prominent solicitors and accountants, who also would have been familiar with the process.  Both clients and all the advisers would have known that the sale of a business or part of business was potentially a complex transaction, and might involve the sale of shares or the sale of assets, or a combination; that a sale might require notification to shareholders, or merger clearance.  Both parties went through that process in the sale and purchase of ACT. 
116.	They would have known that a sale transaction typically involved the seller offering the business, the provision of information, negotiation to reach provisional agreements on basic terms, due diligence, the preparation of a detailed draft contract, negotiations over the details, the conclusion of a sale contract, often at a meeting at which remaining disagreements are resolved, and completion.  It is only necessary to glance at the ACT Agreement (including 30 pages of warranties) to see how complex a sale of shares in a technology company can be.
117.	The solicitors would also have known that it would have been possible to provide a mechanism for resolving issues as to fair market value, and perhaps (but by no means certainly) as to fair and reasonable terms by providing for arbitration or expert determination, as they did in relation to adjustment of the purchase price and the equitable division of damages against a landlord.
118.	Furthermore, both parties would have realised that the sale and purchase of a Target Business would not necessarily involve simply an agreement for the sale and purchase of shares.  Both parties were well aware of the existing competition in the UK market for laboratory/radiology and patient information management systems.
119.	Misys had made submissions to the OFT on the acquisition of CDS in 2000, and iSOFT had itself made submissions on the acquisition of ACT, on the competitive structure of the market.  According to Misys’ submission to the Office of Fair Trading on the acquisition of CDS, the competitors of ACT and CDS were both national and international suppliers, of whom a number were named, including iSOFT.  The overall number of medical laboratories in France, Germany and Italy alone was 13,000 compared to less than 700 in the UK.  In 1999 the number of pathology contracts let in the UK was 22, of which 7 had been won by Real Software (formerly Bull/Berkeley), 4 by CDS, 4 by William Woodard Associates, 3 by ACT, 2 by Bayer plc, 1 by Sunquest Europa Ltd, and 1 by Détente.  After 1999 other companies had moved into the healthcare market, including Siemens and Torex.  In its submission to the OFT in 2001 on the acquisition of ACT/CDS, iSOFT had given a substantial list of competitors in the supply of patient information management systems in the UK, and referred to the large number of non-UK companies in the field, and the number of new entrants, including Australian, US and Belgian companies. 
120.	It is apparent that there were several competitors in the market, that it was a fast-moving market with new entrants coming into the market over a relatively short period, and that the competitors or potential competitors would include not only UK companies, but a variety of foreign, or foreign-owned, companies.  
121.	In the present case Europa had only about 1 per cent of the combined employee strength of the Sunquest group, but the Agreement envisaged that the Target Business might be employing up to 20% of the total work force of the acquired entity.  Accordingly, the Target Business might be very substantial.  The Target Business might be a separate UK company owned by the acquired entity, or it might be a branch of a Belgian or Australian company.  Some of its employees, including senior staff, might be working both in the Restricted Area and outside it.  Its head office functions might be separately centred in the Restricted Area, or they might be inextricably linked with those of the acquired entity.  Even if the Target Business were carried on by a separate entity substantially centred in the Restricted Area, part of its business might be outside the Restricted Area.
122.	The Target Business would be likely to have continuing obligations to the National Health Service or to the private sector, and their equivalents in other parts of the Restricted Area.  If it were a subsidiary of a foreign company, the parent company might have given guarantees. The purchaser of the Target Business would need to be satisfied of continuity of supply from the acquired entity.  The vendor would need to be satisfied that it would be indemnified by the purchaser for any guarantees it might have given.  If the Target Business depended on its overseas parent or overseas head office for the long-term supply of its products, then that relationship would need a formal contractual structure in the event of a sale. 
123.	Against that background, in my judgment it is a wholly uncommercial reading of clause 11.4.2 to interpret it to mean that the relevant Restricted Person is to make an offer which is immediately capable of acceptance.  Commercial common sense dictates that the vendor will indicate a willingness to sell, and perhaps also set out some basic terms, but it is absolutely inherent in the process that the detail, sometimes involving important questions of principle (such a cap on warranty liability, or a contractual time-limit for claims) will have to be reserved for the negotiation process.  Consequently, my conclusion is that the first two sentences of clause 11.4.2 have to be read together, and that what they amount to is that “the parties agree to negotiate in the hope of effecting a … contract” (Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503, 515).  
124.	That conclusion is confirmed, but is no way dependent upon, the facts of this case.  In the present case, Europa is a separate legal entity, and an important factor identified by Misys as showing that the concept of an offer capable of acceptance is unintended and unworkable is the need for a purchaser to be assured that Europa will have a secure licence to ensure continuity of supply and support from Sunquest.  iSOFT says that clause 11.4.2 in the present circumstances is concerned only with an offer to sell the share capital of Europa at fair market value and on fair and reasonable terms, and it is not contended that Holdings was obliged to procure the offer of a new licence.  But it would be a commercial nonsense for iSOFT to buy Europa when it had no assured supply of products and services.  
125.	But that is not the only complication.  Europa carries on business in Europe not only in the United Kingdom and Ireland, which are part of the Restricted Area, but also in Denmark, where it has substantial contracts, and a permanently based employee, and solicits business in the Middle East, which is not part of the Restricted Area.  I did not hear argument as to whether the obtaining and servicing of contracts by Europa outside the Restricted Area is part of its business within the Restricted Area, but in purely commercial terms (whatever may be the strict meaning of the words) clause 11.4.2 does not envisage the protection of goodwill in countries outside the Restricted Area, or the sale of the business in those countries.  Consequently to the extent that Europa carries out sales and support activities in those countries, such as Denmark, it is inevitable that those parts of the business would have to be dealt with, for example by selling that part of the business to iSOFT, or by transferring it back to Sunquest or by transferring it to another entity inside or outside the group.
126.	What actually happened in the case of Sunquest is simply an illustration of one of the types of business which must have been envisaged by the parties, the takeover of an American company which also carried on business in other parts of the world, including some or all of the Restricted Area.  I accept that the subsequent conduct of the parties is no aid to construction, but there is no doubt that until November 14, 2001, the parties were proceeding on precisely this basis, recognising that they would be putting forward proposals for negotiation, that the terms of the licence were an essential element, and that detailed terms and conditions would have to be settled. 
127.	If my conclusion, which is based on the wording of the clause in the light of the commercial background, is right, then no further question arises on this part of the case since iSOFT accepts that if offer does not mean offer capable of acceptance, then the first two sentences of clause 11.4.2 are simply an unenforceable agreement to negotiate and agree.
128.	But if I am wrong on that issue, and “offer” does mean offer capable of acceptance, then I am satisfied that it is so uncertain that it cannot be enforced, whether by specific performance or otherwise.  I accept Misys’ submission that the court is not being asked simply to give certainty to an existing term of an existing contract.  It is being asked to write an entire draft contract in a complex field.  Even the subject matter of the potential contract is not specified, but is left for the parties to decide when the circumstances bringing clause 11.4.2 into play arise.  
129.	If iSOFT’s approach is right, then the court would have to establish the “fair market value” of a company which is the exclusive distributor of products and services in a situation where its distribution agreement/licence has no fixed term, where the royalty it will pay is not determined, and where the quantities it may order are not agreed.  For the reasons mentioned above, even this may be too simplistic an approach, since parts of Europa’s business are outside the Restricted Area and arguably may be retained. 
130.	The court cannot simply order an offer to be made at “fair market value” and on detailed terms which are fair and reasonable to both parties, since Misys could not possibly know what precisely is required, and it would be manifestly unjust and absurd for iSOFT to bring contempt proceedings on the basis of the presentation of terms which are arguably unfair or unreasonable.  That is why iSOFT seeks an order for “detailed terms and conditions which are fair and reasonable” to both parties to be established by the court, by analogy with orders for specific performance of contracts for sale or lease.  I am satisfied that such an obligation, if such it was, would be too uncertain to be enforced.
131.	Nor can it be said, on the basis of Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444, that clause 11.4.2 sets objective criteria by which the terms of the offer can be ascertained and that the court can provide its own machinery for that purpose, either because there is no contractual machinery or because the contractual machinery has broken down. It may be possible for the court to ascertain the fair market value of a freehold reversion, or (in the case of an action for specific performance of a contract to grant a lease or sell land) to settle the terms of a lease or conveyance.  It may be possible to ascertain the fair market value of a private company (although it was not possible in Gillatt v Sky Television Ltd [2000] 2 BCLC 103 (CA)).  
132.	But here the task could not be simply the valuation of the shares of Europa (for the reasons already given), and the notion that the settling of detailed terms and conditions which are fair and reasonable to both parties is mere machinery which the court can undertake is fanciful.  The court would have to construct a complete contract from scratch, working out on a term by term basis what term is fair and reasonable to both parties. There is no manageable standard by which the fairness and reasonableness “to both the relevant Restricted Person and the Buyer” can be set or measured other than what is actually acceptable to both parties.  
133.	In the Sudbrook case this problem did not arise, because the contract provided that the sale was to be subject to the Law Society’s conditions of sale current at the time of sale.  In this case the court would, for example, be faced with settling detailed warranties or indemnities, which are frequently the subject of intense negotiation.  This would, to adapt the words of Lord Wright in Scammell v. Ouston [1941] AC 251, 273, be making an entire contract for the parties.  In speaking of the expression “on hire-purchase terms” he said: “The law has not defined and cannot of itself define what are the normal and reasonable terms of a hire-purchase agreement. Though the general character of such agreement is familiar, it is necessary for the parties to agree upon the particular terms.” The case of an agreement for the sale and purchase of shares or of a business is an a fortiori one.  The leading firms of solicitors have precedents for use in sales of shares or businesses which are adapted for the particular transaction, but there then follows a detailed process of negotiation on the terms put forward by the party charged with producing the first draft. 
134.	In any event, I would have held that this is not a suitable case for an order for specific performance.  If the court were to establish the terms of the offer, that could only be done after a lengthy process with expert evidence on both sides, and yet iSOFT has not said that it will accept the terms so established (even though, on this hypothesis, they are fair and reasonable) and the court may be acting in vain.   
135.	For completeness I add that if, contrary to my conclusions, clause 11.4.2 envisaged an offer capable of acceptance and it were enforceable,  iSOFT would not have been estopped by convention from taking that position on the ground that it had conducted negotiations at least until November 14, 2001 on the footing that clause 11.4.2 did not require an offer capable of acceptance.  Although there are many documents indicating that both sides were operating within the general framework of clause 11.4.2, from at least September 12, 2001 (and probably from August 10) both parties recognised that the negotiations went beyond the scope of clause 11.4.2, and from October 26 (which was within the 3 month period envisaged by clause 11.4.2) iSOFT was taking the position that Misys was deviating from the Agreement. There was no common assumption as to the effect of clause 11.4.2.
Injunction
136.	I am satisfied also that Misys is right on this aspect.  Clause 11.4 allows a Restricted Person to acquire any interest in any entity which carries on a Restricted Business in the UK, provided that the number of employees employed in the Restricted Business in the UK does not exceed 20% of the workforce of the entity acquired, and that the clause 11.4.2 process is gone through.
137.	Both parties accept that during the clause 11.4.2 process (and also thereafter, if the Target Business is not sold to iSOFT or a third party) the Target Business may be continued.  The Target Business may be very substantial, since its employees may be up to 20% of those of the acquired entity.  It might be a local subsidiary of the acquired entity, or a branch.    
138.	“Nothing in Clause 11.2.1 and 11.2.2 shall prevent” the acquisition.  It is accepted by iSOFT that clause 11.4.2 envisages that the Target Business will be carried on after the acquisition.  Indeed, although it is not necessary to decide or develop the point, I think it likely that it obliges the Misys group to carry the business on after the acquisition, for otherwise iSOFT might not be able to take advantage of the opportunity which clause 11.4 gives it to make indirect use of Misys’ power to acquire a competing business.  In any event the parties agree that the wording and structure of clause 11.4.2 make it clear that at least while the process was continuing the business would be carried on.
139.	I consider that for present purposes the key word in the opening expression of clause 11.4 is “nothing”.  In my judgment, it goes further than simply allowing the acquisition of interest in an entity part of which carries on a Restricted Business. If iSOFT is right, the UK branch will be “that part of the acquired entity which carries on a Restricted Business,” but the acquired entity will be a Restricted Person and will not be able to assist or be engaged in the carrying on of the business. A local subsidiary may need credit from a bank and the bank may require a parent company guarantee or letter of comfort; it may need supplies from its parent; it may need head office function. If iSOFT is right the parent company would not be able to assist. To read clause 11 as preventing that assistance in the case of branches and subsidiaries would be uncommercial and unrealistic, and I do not consider that it can reasonably be interpreted in that sense.
140.	Accordingly, my conclusion is that since clause 11.4.2 (as is agreed) allows the business to be carried on, it envisages that the Target Business and the relevant Restricted Person would maintain the ordinary relationship of a business and its owner, and (where applicable) of parent and subsidiary, and accordingly the business could be carried on in the ordinary course. That conclusion is reached either by a process of interpretation of the opening words of clause 11.4.2 or by necessary implication.    
141.	On the facts, I accept Misys’ submission that none of the events relied on can really be regarded as anything but a part of Europa’s ordinary business, and its ordinary relationship with its parent.  Europa’s business as at the time of acquisition by Misys was the promotion and supply of Sunquest’s products to existing and future clients in Europe.  That business necessarily involved competing with iSOFT, adopting its parent branding, and depending almost entirely on its parent to carry on its business (by way of technical, marketing, product, and administrative support).  Sunquest executives assisted Europa to obtain the WLPC contract by meeting and discussing it and its products; and that executives of Misys and the new management of Sunquest endeavoured to give comfort to WLPC about the takeover by Misys and the possible sale to iSOFT. 
142.	If I had been wrong in this conclusion, I would have refused an injunction on the ground that it would not have been possible to fashion an order which would have effectively distinguished between what iSOFT says is allowed, the carrying on of business by Europa, and what is not allowed, the assistance in the carrying on of, or the engagement in, the target business, by Misys or Sunquest.
143.	iSOFT also took the position that, if iSOFT is wrong and clause 11.4.2 is void for uncertainty, the consequence of that finding will be to leave clause 11.2 intact without any carve out for acquisitions of the type contemplated by clause 11.4.  I will not develop my reasons for rejecting a point that was not pressed: (a) the court's unwillingness to intervene by court order does not mean that clause 11.4.2 does not have practical meaning and effect;  (b) the first two sentences of clause 11.4.2 can be (and probably were) complied with; and (c) in any event clause 11.4.2 is not wholly devoid of legal effect, since the obligation to supply information in the third sentence and conditions on disposal in the fourth sentence to third parties are enforceable. 
144.	The result, therefore, is that iSOFT’s claims fail.