Westbase Technology Ltd v Vuzix Corporation (incorporated in Delaware, USA)

Hearing date: 11 November 2025

Approved Judgment

This judgment was handed down remotely on 30 January 2026 by circulation to the parties or their representatives and by release to the National Archives.

This is the court's reserved judgment following the one-day hearing on 11 November 2025 of the application of the Defendants/Applicants to set aside the order granting the Claimant permission to serve its Claim Form on the Defendants out of the jurisdiction, in the United States (the “ Application”).

PARTIES

The Claimant, and Respondent to this Application, is Westbase Technology Limited, a limited company registered in England and Wales (“ Westbase” or “ C”) with its place of business and registered office in Wales. The First Defendant/Applicant is Vuzix Corporation, a Delaware company with which C had a business relationship (“ Vuzix” or “ D1”). The original Second Defendant (“ D2”), Mr Peter Jameson, was the COO of Vuzix. He sadly died shortly after these proceedings were commenced, and at today's hearing I approved a consent order to substitute Alison Jameson, solely in her capacity as personal representative of his estate, as Second Defendant and in such capacity join her to the Application. The Third Defendant/Applicant (“ D3”) is Mr Paul Travers, the CEO at the relevant time of Vuzix.

C makes a claim for breach of contract and negligent misrepresentation against D1, and claims for negligent misstatement against D2 and D3.

BACKGROUND

Distributor Agreement

Westbase and Vuzix were parties to a Distributor Agreement dated 15 June 2022 (the “ Distributor Agreement”). Pursuant to that agreement, C agreed to purchase and act as distributor for certain products — extended reality “smart glasses” and accessories — manufactured and supplied by Vuzix.

The Distributor Agreement requires the Distributor to meet a “minimum business volume” of $1.3million annually, measured in amount paid to Vuzix. The Distributor Agreement had an initial 3 year term, automatically renewable for one-year periods unless prior notice is given.

It describes C as the “non-exclusive” distributor for the specified Vuzix products, but also sets out in Section 3(f) restrictions on D1 appointing other distributors within the “Territory” (defined as EMEA), and those restrictions were extended to 31 December 2023 by an agreed amendment on 11 April 2023 (the “ Agreed Amendment”). As amended, that section reads “ Until December 31, 2023, Vuzix shall not appoint any new distribution, reseller or channel partners, under substantially the same terms set forth in this Agreement, either directly or indirectly within the Territory without the written agreement of the Distributor”. In addition, Exhibit C includes the language “ During the first year of the Agreement, Vuzix agrees not to extend the same or better discount in the Territory to any existing or new distributors, resellers or any other channel partners.” This language in Section 3(f) and Exhibit C is referred to as the “ Exclusivity Terms”.

This Distributor Agreement contains a “Choice of Law; Venue” clause which expressly chooses the law of the State of New York as the governing law and exclusive venue in the following terms:

“ This Agreement shall be governed by and construed in accordance with the laws of the State of New York, United States, without regard to any choice of law principles, and the United Nations Convention on Contracts for the International Sale of Goods shall not apply. Any claim related to this Agreement shall be exclusively brought in the courts located in the State of New York, or at Vuzix's option and in its sole discretion, any such other venue having jurisdiction over Distributor.”

It contains a number of additional terms said to be relevant to the dispute as to jurisdiction, namely:

i) an express termination clause (Section 9(b)),

ii) a provision (Section 9(c)) giving Vuzix the option to repurchase unsold stock upon termination and providing a 90-day period following termination for Westbase to sell any such unsold stock that Vuzix declines to repurchase,

iii) an entire agreement clause (Section 12(a)) which says the “ sole and entire understanding and agreement” of the parties is contained within “ This Agreement, together with [Vuzix's] standard Terms and Conditions of Sale… and including all exhibits and any other attachments hereto or other documents or agreements referenced herein”. After the words “ Vuzix's standard Terms and Conditions of Sale” a link is included in brackets which I am told takes one to a web address which shows not only Vuzix's standard terms of sale, but also their terms of purchase, and those terms of purchase contain a governing law and jurisdiction clause also naming New York as the governing law and venue for bringing claims,

iv) An “Amendment, Waiver” clause (Section 12(b)) in the following terms “ Any amendment, modification or waiver with respect to this Agreement shall only be effective if made in a signed writing. No failure or delay of either Party in exercising any of its rights or remedies hereunder shall be construed as a waiver thereof, and any single or partial exercise of any right or remedy shall not preclude any other or further exercise” and

v) A “Nature of Relationship” clause (Section 12(c)) indicating the parties are strictly independent contractors with respect to each other.

It is disputed whether C's wholly-owned Dutch subsidiary, Westbase BV (“ BV”), who is included along with C within the definition of “Distributor” under that agreement, was also a party to that agreement. It is acknowledged that BV did place orders under the Distributor Agreement and still holds stock so acquired. It did not sign either the Distributor Agreement or the Agreed Amendment.

The relationship was not as successful as the parties hoped. In the first year C sold only a small proportion of the stock it had purchased under the Distributor Agreement, about $270,000 out of the $1.3million purchased.

On 21 November 2023, C wrote to D1 seeking “a resolution” and threatening legal action for alleged breach of Exclusivity Terms and for misrepresentation as to Vuzix's “run rate” for the relevant products represented prior to the Distributor Agreement. C then put its “estimate of loss” at $1.797 million, being (i) $1.119 million for the purchase price paid by C for stock it had been unable to sell, plus (ii) $397,000 for the margin it expected to make on sale of such stock, (iii) $105,000 for the cost of stock funding at 7%, (iv) $36,000 for marketing costs expended and (v) $50,000 in respect of internal sales efforts, management time, system integration etc.

Alleged Oral Settlement Agreement

The parties entered into discussions aimed at resolving their dispute. C says resolution was finally reached pursuant to an oral agreement made in 3 telephone calls in the end of year holiday period – calls between Mr Kakad, director of C (and also of BV) and Mr Jameson, the Second Defendant and COO of D1, on 27 December and 29 December 2023, and a call between Mr Kakad, Mr Jameson and Mr Travers, Third Defendant and CEO of D1, on 3 January 2024 (the “ Calls”).

It is not disputed that those Calls took place. There are transcripts in evidence of recordings taken by Mr Kakad of the 27 December and 3 January calls. To put it as neutrally as possible, the outcome included an understanding that D1 would buy back the remaining unsold stock in 5 tranches over a period of one year, at the original sale price.

It is said by C that this was a legally binding oral contract, entered into in full and final settlement of all claims between the parties, that “replaced” in its entirety the Distributor Agreement including its governing law and jurisdiction clause. In oral argument it was explained that the legal mechanism of this “replacement” was that by entry into a new agreement entirely inconsistent with the Distributor Agreement, the parties rescinded the Distributor Agreement and substituted in its place the new oral agreement.

It is said by the Defendants that the transcripts of the recorded Calls show the parties expressly agreed that their understanding would not be legally binding, they lacked intention to create legal relations and no contract arose from those Calls. They say even if those Calls had created a legally binding obligation to repurchase stock, they did not rescind, discharge or vary the Distributor Agreement, and therefore the governing law and jurisdiction clause of that Agreement remains in effect and is wide enough to capture any claim in respect of that obligation.

Subsequent Events

In 2024, D1 did make two repurchases of unsold stock: $90,000 in January 2024 and $110,000 in April 2024. There were no further repurchases of stock. In September 2024, D1 purported to terminate the Distributor Agreement for various breaches, including failure by C to purchase its minimum business volume of $1.3 million in the prior year and failure to market that stock for sale.

CLAIMS AND PROCEDURAL HISTORY

C wishes to make claims before this court in contract and tort against the Defendants amounting to some £728,905 plus interest, being:

i) A breach of contract...