Unilateral Promise by an Optionholder Can Extinguish or Curtail Option Rights, and Waiver/Personal Bar Cannot Revive Them

1. Introduction

In Kirkwood Homes Limited against Cameron [2026] CSOH 88, Lord Harrower (Outer House, Court of Session) determined whether a residential developer (“the pursuer”) had validly exercised an option to purchase development land from a landowner (“the defender”). The dispute arose because, after the parties’ 2008 option missives granted wide flexibility to the pursuer to take options over “all or any” of the option area, the pursuer later delivered a unilateral undertaking (December 2016) restricting itself to a single exercise, and only for land comprising at least the “site” for which planning permission had been obtained (or such other area as the parties might agree).

Shortly before the option period expired, the pursuer served an option notice (28 November 2018) for a smaller area than the permitted “site”. Following valuation correspondence, the defender asserted the notice was invalid and halted the valuation procedure. The pursuer treated that as repudiation, accepted it, and sued for damages exceeding £5 million for loss of development opportunity.

The case came before the court on the procedure roll on preliminary pleas, with the central issue being whether the pursuer’s notice was valid in light of the 2016 undertaking, and (if invalid) whether waiver or personal bar could nonetheless found liability.

2. Summary of the Judgment

  • The court dismissed the action, sustaining the defender’s first plea-in-law (para [12]).
  • The court held that the pursuer’s 2016 undertaking, as a binding unilateral promise, had the effect of curtailing/extinguishing the pursuer’s ability to exercise the option except in the restricted manner promised (paras [8]–[9]).
  • Because the 2018 notice sought to exercise the option over an area smaller than the “site” and there was no agreed alternative area, the notice was ineffective; no obligation to sell arose (paras [1], [5], [8]–[9]).
  • Waiver and personal bar could not “revive” rights the pursuer had extinguished by its promise; they operate as a shield not a sword (para [11]).
  • Any recreation of a right to buy a smaller area would have required a fresh grant from the defender, which did not occur (para [11]).

3. Analysis

3.1 The core legal move: a unilateral promise can restrict the promisor’s contractual option rights

The pursuer’s primary argument attempted to separate (i) the missives as the source of contractual option rights from (ii) the later undertaking as a unilateral promise incapable of varying a bilateral contract. The defender, by contrast, argued the undertaking rendered the later notice invalid because the undertaking restricted what could competently be done.

Lord Harrower accepted the formal point that the undertaking did not vary the missives in the contractual-variation sense (para [7]), but held that this was not determinative. The “practical effect” of the undertaking was to restrict the pursuer’s rights under the missives, because an option of the kind granted—exercisable unilaterally by the optionholder— could equally be unilaterally restricted or extinguished by that optionholder without any bilateral amendment (paras [7]–[9]).

The court’s reasoning is significant because it characterises the undertaking as operating on the optionholder’s power to trigger contractual machinery. Once the pursuer bound itself not to exercise except in the promised way, it no longer possessed an effective power to exercise otherwise; the purported exercise was therefore null in effect.

3.2 Precedents cited and their influence

HOE International Limited v Andersen 2017 SC 313

The pursuer relied on HOE International Limited v Andersen 2017 SC 313 to argue that the validity of an option notice must be assessed by the contract’s notice requirements (the missives), rather than by reference to the later undertaking (para [6]).

The court held that HOE offered limited assistance (para [10]). The dispute was not merely whether the notice complied with contractual “manner and form” requirements; rather, the undertaking had curtailed the underlying option rights themselves. In other words, even a notice satisfying contractual formalities would be ineffective if, by unilateral promise, the optionholder had removed its own entitlement to exercise in that manner.

Macfarlane v Johnston & Ors (1864) 2 M 1210 and Stair, I, x, 3

The pursuer invoked Macfarlane v Johnston & Ors (1864) 2 M 1210 and Stair, I, x, 3 to emphasise that a promise is unilateral and binding without acceptance, and is distinguishable from contract which requires mutual consent (para [6]).

Lord Harrower did not reject that doctrinal account; instead, he treated it as ultimately beside the point (para [9]). The undertaking’s unilateral nature did not prevent it from being legally effective in restricting the promisor’s ability to exercise an option that is itself unilaterally exercisable. The judgment thus uses orthodox promise doctrine to support (not defeat) the conclusion that the pursuer bound itself to a narrower mode of exercise.

Shaw v James Scott Builders & Co [2010] CSOH 68 and Advice Centre for Mortgages Limited v McNicoll 2006 SLT 591

On the pursuer’s fall-back contentions about post-notice correspondence (waiver/personal bar), the court relied on:

  • Shaw v James Scott Builders & Co [2010] CSOH 68 (para 64), and
  • Advice Centre for Mortgages Limited v McNicoll 2006 SLT 591 (para 17),

for the proposition that waiver and personal bar operate as a shield rather than a sword (para [11]). Applying that principle, Lord Harrower held that such doctrines could not be deployed to create (or recreate) a substantive entitlement that the pursuer had already extinguished by promise. If the pursuer wanted the ability to buy a smaller area than the “site”, that would require a fresh grant from the defender—not estoppel-like reasoning based on subsequent conduct (para [11]).

3.3 Legal reasoning in structured form

  1. Identify the baseline contractual power: Under the 2008 missives, the pursuer had an option power exercisable unilaterally over all/part of the option area within the option period (paras [2]–[3]).
  2. Characterise the 2016 undertaking: It was a binding unilateral promise by the pursuer limiting itself to one exercise and to an area not less than the “site” (or other agreed area) (paras [3], [8]).
  3. Determine effect: Because an option is a unilateral power, the optionholder can unilaterally restrict how it may be exercised; thus the undertaking extinguished the ability to exercise contrary to its terms (paras [8]–[9]).
  4. Apply to the facts: The 2018 notice sought a smaller area than permitted; no agreement existed for an alternative area; therefore the purported exercise was invalid/ineffective (paras [1], [5], [8]–[9]).
  5. Reject curative doctrines: Waiver/personal bar cannot recreate extinguished rights; only a fresh grant could do so (para [11]).

3.4 Impact and significance

The decision has practical importance for Scottish commercial property practice, particularly where option arrangements interact with planning processes and section 75 obligations:

  • Optionholders must treat unilateral undertakings as rights-limiting instruments: A promise given to unlock planning cooperation (here, entry into a section 75 agreement) may later prevent strategic “reconfiguration” of the land take at option exercise.
  • Drafting and transaction management: Parties should expressly regulate whether the optionholder may later serve notice for a smaller area, and if so, on what mechanism (e.g., pre-agreed carve-out criteria, deemed consent process, or variation requirements). Reliance on informal correspondence or valuation engagement will not necessarily cure an invalid exercise.
  • Litigation framing: Claims in repudiation/damages premised on refusal to complete will fail if the underlying notice never triggered a duty to sell. The judgment reinforces that the first question is whether an effective exercise occurred.
  • Limits of personal bar/waiver in “creating” rights: The reaffirmation that these doctrines are defensive reduces scope for arguments that post-notice negotiations can transmute an ineffective option exercise into a binding obligation.

4. Complex concepts simplified

Option (in land contracts)
A contractual mechanism giving the optionholder the power (but not the obligation) to compel a sale if exercised validly within the option period and in accordance with agreed conditions. Typically, the optionholder’s unilateral act (service of a compliant notice) “crystallises” the seller’s obligation to sell.
Unilateral promise (Scots law)
A binding commitment made by one party that does not require acceptance to be enforceable. In this case, the pursuer’s promise limited its own future freedom to exercise the option.
“Variation” vs “practical effect” on rights
A bilateral contract is ordinarily varied by mutual agreement. But where a contract grants one party a unilateral power (like an option), that party may bind itself by promise not to use that power except in a restricted way—changing what it can effectively do, even though the written contract text is unchanged.
Waiver and personal bar (“shield not sword”)
These doctrines can prevent a party from insisting on a right or pleading a point inconsistently with earlier conduct (defensive use), but they do not ordinarily generate a new substantive right where none exists. Here, they could not recreate an option entitlement the pursuer had already given up by promise.
Section 75 planning agreement
A statutory planning obligation under section 75 of the Town and Country Planning (Scotland) Act 1997, often used to secure infrastructure contributions or restrictions tied to development consent.

5. Conclusion

[2026] CSOH 88 establishes a clear and practice-focused principle: where an optionholder gives a binding unilateral undertaking restricting its option exercise, that promise can curtail or extinguish the optionholder’s effective contractual power to exercise otherwise, even though the underlying missives are not formally varied. An option notice served outwith the promised limits is ineffective, and doctrines such as waiver or personal bar cannot be used to recreate the lost right; only a fresh grant can do that. The case is a cautionary authority on the legal consequences of “one-off” undertakings given in the planning and development context.