PRESENT: Hassell, C.J., Lacy, Keenan, Koontz, Lemons, and Agee, 

JJ., and Stephenson, S.J. 

VALERIE HAMLET, ET AL. 

 OPINION BY 

v. Record No. 060762 SENIOR JUSTICE ROSCOE B. STEPHENSON, JR. 

 March 2, 2007 

JACKIE L. HAYES, ET AL. 

FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON 

William C. Andrews, III, Judge 

 The issue in this appeal is whether the trial court erred 

in sustaining the defendants' demurrers, holding as a matter of 

law that the plaintiffs' bill of complaint failed to allege the 

essential elements of a breach of contract suit that would 

entitle the plaintiffs to the relief of specific performance. 

I 

 Valerie Miller Hamlet, L. Raymond Miller, Jr., and Jane 

Perry (collectively, the Plaintiffs or the Purchasers) filed a 

bill of complaint against Jackie L. Hayes and Commonwealth Wood 

Preservers, Inc. (Commonwealth or the Corporation) 

(collectively, the Defendants), seeking enforcement of the 

Purchasers' rights under a shareholder agreement dated January 

2, 1990 (the Agreement). The Agreement was attached to the bill 

of complaint as Exhibit A. 

 Both Hayes and Commonwealth filed demurrers to the bill of 

complaint, contending that the Plaintiffs had failed to state a 

claim upon which relief could be granted. The trial court, by 

an order entered January 20, 2006, sustained the demurrers and 
2

dismissed the Plaintiffs' bill of complaint. We awarded the 

Plaintiffs this appeal. 

II 

 This case was decided by the trial court on demurrer; 

therefore, we review the trial court's decision de novo based 

upon the facts alleged in the Plaintiffs' bill of complaint, 

including the documents incorporated therein and made a part 

thereof. In so doing, the Plaintiffs are entitled to the 

benefit of all reasonable inferences that may be drawn from the 

facts alleged. See Glazebrook v. Board of Supervisors, 266 Va. 

550, 554, 587 S.E.2d 589, 591 (2003). 

A 

 Commonwealth is a closely held corporation, and the 

Agreement imposes certain restrictions and obligations on its 

shareholders. All of the Purchasers and Hayes are shareholders 

in Commonwealth and are parties to the Agreement, either as 

direct signatories or as successors-in-interest to signatories. 

 Paragraph 1 of the Agreement, entitled "Voluntary transfers 

of stock," prohibits a shareholder from transferring shares of 

the Corporation by any means except as provided by the 

Agreement. Subparagraph (a) of paragraph 1, entitled "Offer by 

Shareholder," provides, in pertinent part, that "[a] Shareholder 

desiring to sell or exchange all or any part of his Shares shall 

give the Corporation . . . a written offer to sell such Shares 
3

to the Corporation (the 'Notice')." Subparagraph (b) of 

paragraph 1, entitled "Acceptance of Offer," provides, in 

pertinent part, that the Corporation "may at its option, by 

written notice to the [selling] Shareholder and other 

Shareholders . . . , elect to redeem all, or any part, or none 

of the Shares of the Corporation proposed to be sold or 

exchanged." Subparagraph (b) further requires the Corporation 

to notify the selling shareholder and the other shareholders, in 

writing within 30 days of receipt of the offer, of the number of 

shares, if any, the Corporation intends to redeem. Upon receipt 

of such a notice from the Corporation, each of the remaining 

shareholders may purchase his "Proportionate Share" of the 

shares not being redeemed by the Corporation. 

 The term "Proportionate Share" is defined, in subparagraph 

(b), as 

that portion of the shares of the Corporation offered 

for sale or subject to option which the shares of the 

Corporation owned by a Shareholder bear to all the 

Corporation's shares owned by all the Shareholders 

(other than those offered for sale or under option). 

In addition, if any shares of the Corporation offered 

for sale or under option are not purchased by the 

first shareholder entitled thereto, the term 

"Proportionate Share" shall include that portion of 

the shares of the Corporation not purchased by the 

Shareholder first entitled thereto which the shares of 

the Corporation owned by a Shareholder bears to the 

Corporation's Shares (other than those offered for 

sale) owned by all Shareholders other than the 

Shareholder first entitled to purchase. 
4

 Subparagraph (b) further provides, in pertinent part, that, 

"[i]f the Corporation and/or the Shareholders agree to redeem 

and/or purchase all of the Offered Shares, the Purchase Price 

shall be equal to the value of the sale or exchange specified in 

the Notice; however, the terms for payment shall be in 

accordance with the provisions of Paragraph Numbered 8 of this 

Agreement." 

 Paragraph 8, subparagraph (b) of the Agreement applies to 

the shares that are "purchased by all or some of the remaining 

Shareholders" and provides that the purchase price shall be paid 

at closing. Subparagraph (b) further provides, in pertinent 

part, that "[n]ot less than Twenty Percent (20%) of the Purchase 

Price shall be paid in cash and the balance shall be paid by the 

delivery of each Shareholder's negotiable promissory note." 

Subparagraph (d) of paragraph 8 addresses "Closing" and 

provides, in pertinent part, that "[t]he Closing of any purchase 

and sale shall take place at the office of the Corporation at a 

date designated by the Corporation which shall be not more than 

thirty (30) nor less than ten (10) days following the date of 

exercise of the option by the purchaser(s)." 

B 

 Millard M. Davis, a shareholder in the Corporation and 

chairman of its board of directors, offered to purchase all of 

Hayes' shares for $700,000 "subject to [the Corporation's] 
5

declining to buy [the] shares." Thereupon, Hayes offered his 

shares to the Corporation by a memorandum dated August 17, 2004, 

which reads as follows: 

SUBJECT: Sale of Stock 

You are hereby notified I have received an offer to 

sell my 150 shares in Commonwealth Wood Preservers, 

Inc. for $700,000 to current shareholder, Millard M. 

Davis, subject to Commonwealth Wood Preservers, Inc. 

declining to buy my shares. 

 On the same date, Commonwealth notified its other 

shareholders, including the Purchasers, that its Board of 

Directors had voted not to redeem Hayes' shares. Commonwealth 

further notified its other shareholders, including the 

Purchasers, that they had "30 days to purchase [their] 

'Proportionate Share' of these shares if [they] so desire[d]." 

Upon receipt of this notice, the Purchasers gave timely 

notice to Commonwealth of their intentions to exercise their 

rights to purchase their proportionate shares of Hayes' stock. 

After receiving the notices from the Plaintiffs, Davis sent 

Hayes a memorandum, dated September 17, 2004, purporting to 

withdraw his offer to purchase Hayes' shares. Hayes 

acknowledged receipt of the memorandum and wrote thereon, "I 

withdraw my offer to sell my stock in [the Corporation]." In 

their bill of complaint, the Plaintiffs stated that they "are 

ready, willing, and able to perform their obligations in 
6

connection with the purchase of Hayes' Shares of the Corporation 

under the terms of the Agreement." 

III 

 The essential elements of a cause of action for breach of 

contract are (1) a legal obligation of a defendant to a 

plaintiff, (2) a violation or breach of that obligation, and (3) 

a consequential injury or damage to the plaintiff. Caudill v. 

Wise Rambler, 210 Va. 11, 13, 168 S.E.2d 257, 259 (1969). The 

Purchasers contend that they sufficiently alleged a cause of 

action against the Defendants for breach of contract. 

 The Purchasers contend that Hayes' written notice to the 

Corporation constituted a valid offer that gave the Corporation 

the right to redeem all or part of Hayes' shares and that, 

pursuant to the Agreement, each of the remaining shareholders 

had the right to purchase his proportionate share of the shares 

not being redeemed by the Corporation. The Purchasers further 

contend that they properly exercised their right to purchase 

Hayes' shares by notifying the Corporation of their intentions 

to do so. Thus, according to the Purchasers, they had an 

enforceable contract. 

 Hayes contends that the Agreement only contained 

restrictions on actual transfers of shares and that, because he 

was not seeking to transfer his shares in violation of the 

Agreement, the trial court correctly sustained the demurrers. 
7

Hayes asserts that the Agreement did not impose on him an 

affirmative duty to sell his shares to three parties with whom 

he had not negotiated and to accept only a 20% down payment with 

the balance of the purchase price payable over time. Hayes 

further asserts that the Agreement did not give the Plaintiffs 

an option to purchase his shares and that there could be no 

contract between the Plaintiffs and him because there was no 

meeting of the minds. Finally, Hayes argues that there was no 

basis for ordering specific performance under the Agreement. 

 We agree with the Purchasers' contentions and reject all of 

Hayes' contentions. First, the Agreement does more than just 

restrict the transfer of shares of the Corporation. The plain 

language of the Agreement establishes the rights of Commonwealth 

and the remaining shareholders to purchase the shares of "[a] 

shareholder desiring to sell." It makes no difference under the 

facts of this case whether this right is called an option or a 

right of first refusal; clearly, the Agreement gave to 

Commonwealth and the Purchasers the opportunity and right to 

purchase the shares that Hayes sought to sell to Davis.∗

 Once 

 ∗

 We conclude that paragraphs 1 and 2 of the Agreement 

granted rights of first refusal and not options. " 'A right of 

first refusal is distinguished from an absolute option in that 

the former does not entitle the [purchaser] to compel an 

unwilling owner to sell. Instead it requires the owner, when 

and if he decides to sell, to offer the property first to the 

person entitled to the right of first refusal.' " Landa v. 

Century 21 Simmons & Co., 237 Va. 374, 380, 377 S.E.2d 416, 419 
8

the Purchasers exercised their right under the Agreement to 

purchase Hayes' shares that the Corporation had declined to buy, 

a binding contract existed requiring Hayes to transfer his 

shares to the Purchasers under the terms of the Agreement. 

 Next, the Agreement imposes upon Hayes more than the 

obligation to sell his shares to the Corporation and the 

Purchasers. The Agreement also imposes upon Hayes the 

obligation to accept the payment terms set forth therein. 

 Finally, the Agreement does provide a basis to order 

specific performance. Paragraph 14 of the Agreement, entitled 

"Specific Performance," provides the following: 

 The parties agree that it is impossible to 

measure in money the damages which will accrue to a 

party hereto or to the personal representatives of a 

deceased Shareholder by reason of a failure to perform 

any of the obligations of this agreement. Therefore, 

if any party hereto or the personal representatives of 

deceased Shareholder shall institute any action or 

proceeding to enforce the provisions hereof by 

specific performance any person, including the 

Corporation, against whom such actions or proceeding 

is brought, hereby waives the claim or defense therein 

as such party or such personal representatives has or 

have an adequate remedy at law. 

 Moreover, even in the absence of paragraph 14, specific 

performance would be the proper remedy. Hayes' shares represent 

unique personal property in a closely held corporation, which 

property is not purchasable in the market. Therefore, there 

 

(1989) (quoting Cities Service Oil Co. v. Estes, 208 Va. 44, 47, 

155 S.E.2d 59, 62 (1967)). 
9

exists no adequate remedy at law for Hayes' failure to abide by 

his obligations under the terms of the Agreement. See Thompson 

v. Commonwealth, 197 Va. 208, 212-13, 89 S.E.2d 64, 67-68 

(1955). 

IV 

 For the foregoing reasons, we hold that the trial court 

erred in sustaining Hayes' and Commonwealth's demurrers and 

dismissing the Purchasers' bill of complaint. Accordingly, we 

will reverse the trial court's judgment and remand the case for 

further proceedings consistent with the views expressed in this 

opinion. 

Reversed and remanded.