If you believe there may be a future problem related to breach of contract because of confidentiality issues (or you’re currently being litigated against for breach of confidentiality) then you will obviously want to ascertain what your legal position is and how you can best protect yourself. This post attempts to take employees (or contractors) through the thought process that should be adopted to undertake a preliminary analysis of the issues involved. However, these issues are complex and it is recommended that the parties to potential litigation obtain independent legal advice from a solicitor. Further, it cannot be emphasised enough that every matter that involves breach of contract is particular to its own facts. It is therefore not possible to offer blanket advice on contractual matters.
This post will therefore address the following issues:
- Is there a contract?
- What are the contractual terms regarding confidentiality?
- What are my options?
The first issue to consider is that of whether a contract exists between the parties. A contract can be written or unwritten, express or implied. If there isn’t a written contract then it is important to obtain evidence of the parties’ intentions to enter into a contract and what they intended the terms of the contract to be.
What are the contractual terms regarding confidentiality?
The second issue to consider is what the terms of the contract actually are. The terms of the contract can be express or implied. The express terms of the contract are those terms which were orally agreed to or included (or annexed to) the actual written contract. Again, it can be sometimes difficult to determine what the actual terms of the contract actually were – there can often be significant disputes over these issues. However, in the majority of cases there are clear and explicit contractual agreements determining what the rights and obligations of both parties to the contract are – including confidentiality (which is a boilerplate term in most contracts). Terms can also be implied into the contract for services or contract of service between the parties. These terms can be implied by statute, common law or custom (amongst others). Common implied terms include the duty of mutual trust and confidence, the duty to keep your employer’s trade secrets confidential, and the duty of fidelity to your employer.
A breach of confidence (by, for example, leaking secrets to a competitor) would be a breach of (normally) the express term(s) of confidentiality included within contracts and a breach of a number of implied terms. However, although leaking the information would be a technical breach of contract the other party to the contract would still have to overcome a potentially cumbersome evidential burden to prove causation (or how the competitor came into possession of the information). Further, the other party would also have to demonstrate a tangible loss suffered as a result of the breach of confidentiality – the leaking of the information may have not caused the other party any loss. However, the other party may still be able to obtain an injunction to prevent you from, for example, leaking any further information to the competitor. This may be potentially expensive in itself should you be liable for the costs of an application for interim relief.
What are my options?
If you’re being threatened with (or subjected to) an action for breach of contract (i.e. being sued) then you have, quite bluntly, two potential options:
- Do nothing
- Negotiate with the other party
Negotiation is always the recommended option. Ignoring a potential problem of this magnitude will always end badly. You can either choose to negotiate or yourself or it may be a prudent time to obtain advice from a solicitor.