Helix 3D Ltd v Dunedin Industrial Property Nominee Ltd [2016] EWHC 3012 (Ch); [2016] PLSCS 329 concerned an option for the purchase of a freehold reversion, which a landlord had granted to its tenant in return for a non-refundable option fee in the sum of £25,000. The option agreement provided for the sale of the freehold for a sum that was not less than £1.5m. The price was to be held at £1.5m for the first two years of the option period. Thereafter, it was to be the greater of either £1.5m or the open-market value of the property (which was to be determined once the tenant had exercised the option). The option agreement required the tenant to pay a 5% deposit on or before the service of the option notice and stipulated that failure to comply would nullify any purported exercise of the option. The tenant served a notice exercising the option in the fourth year of the option period (ie after the expiry of the fixed price period) specifying a purchase price of £1.5m. The landlord claimed that the notice was, or might be, invalid because the property might be worth more than £1.5m. In that scenario, the deposit that the tenant had paid (calculated by reference to the sum of £1.5m) would not be enough. Had the tenant validly exercised the option in accordance with its terms? Could the agreement be made to work? And, if so, how? The judge agreed that something had gone wrong with the language in the option and rejected the landlord’s construction of the agreement as lacking in business sense. A reasonable person would not expect commercial parties to have fashioned “a lottery” in which the buyer would have to guess correctly what the open-market value might be in order to serve a valid option notice. In the judge’s view, commercial parties would expect the validity of the option notice to be ascertainable immediately on the exercise of the option. So the parties must have contemplated that the figure on which the 5% deposit would be based would be either ascertained, or ascertainable, when the deposit needed to be paid. The answer was to interpret the option agreement to mean that the deposit was to be calculated by reference to the price specified in the option notice – and not by reference to the open market value, which had yet to be ascertained. The judge accepted that this might mean that the tenant could unilaterally limit the amount that it paid by way of a deposit, because the purchase price that was ultimately ascertained might be more than the minimum £1.5m. But 5% of £1.5m was a considerable sum, which provided the seller with substantial security for the performance of the contract. The moral of the story is: where possible, road test the machinery in an option to see if, and how, it works in different scenarios and then fine tune the agreement as necessary.   Allyson Colby is a property law consultant