Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

When does a breach of a contract entitle one of the parties to refuse to be bound by it any further? That was the question faced by Mr Justice Cavanagh in the High Court last April in an appeal brought against a judgment of HHJ Wall in Birmingham. The appeal was in relation to a settlement agreement in an employment dispute, known as a COT3. The COT3 is a private contract, and as such, many of the disputes that relate to COT3s address issues of contract law.

The background

The Appellant was the employer, a small kennel company, and the Respondent was a former employee. The Appellant had agreed to pay the Respondent around £15,000 in full and final settlement of an unfair dismissal claim. The COT3 included a confidentiality clause, which read as follows:

“9. The parties will treat the fact of and the terms of this Agreement as strictly confidential and the parties will not disclose them to any other person or entity, […]”

The Respondent breached the clause by telling another former employee of the Appellant that a settlement had been reached, and the amount thereof.

So the question for the judge was: was this breach of the contract enough to eclipse the whole thing and allow the Appellant to stop making settlement payments?

Contract terms

Contractual terms can, broadly, be defined into three categories: conditions, warranties, and intermediate terms. A condition, if broken, allows the innocent party to bring the contract to an end. A warranty does not, the only remedy is damages. An intermediate term, as the name suggests, is somewhere between the two, and the question becomes whether the breach was a repudiatory breach allowing the innocent party to end the contract.

In this case, the Appellant argued that Clause 9 was a condition of the contract, or in the alternative a repudiatory breach of an intermediate term. The Appellant’s reasoning was that, of 13 clauses in the contract, three of them related in some way to confidentiality, so there was a high degree of focus on it. Also, the Appellant argued that use of the word “strictly” before confidential had the same effect.

On the other side, the Respondent argued that it was clear the Appellant wasn’t really that concerned about confidentiality; it didn’t represent a fundamental part of the agreement, and there wouldn’t even be any tangible damage to the Appellant by a breach of the clause.

Judgment

Cavanagh J, after a discussion of the relevant contract law principles, agreed with HHJ Wall, and by extension the Respondent, that the clause was not a condition. On the question of whether it was a repudiatory breach of an intermediate term, it was held that was never likely to, and did not, result in any commercial embarrassment or other commercial problems for the employer. For these reasons, Cavanagh J dismissed the appeal.

As with most questions of contractual construction, the important thing is to look at clauses in the round, and their impact on the contract as a whole. Terms may not always be specified as conditions or warranties, and so it is important to consider their importance when assessing whether a party is able to walk away from the contract.

Link to judgment: https://www.bailii.org/ew/cases/EWHC/QB/2020/1208.html

Tagged with →  

Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

Share →

Our awards

Request a callback

    Your first name (required)

    Your last name (required)

    Your email (required)

    Your telephone number (required)

    Brief details of your enquiry

    Testimonials

    4.79 Average

    339 Reviews

    James B

    Great and prompt service- would recommend and use again!

    Posted 9 hours ago

    Emma L

    Excellent service. From start the team where efficient and helpful, the whole process was made easy on a very stressful and upsetting situation. They worked well to support my situation and negotiate. Would highly recommend. Thank you to Chris, Sacha and the team.

    Posted 10 hours ago

    Brian H

    I must say, not seeing any of you and doing all on-line works very well. Very pleased with the service and would recommend you. Fantastic service. Many thanks Brian Haines

    Posted 11 hours ago

    Sheenu A

    Professionals with excellent quality of work.

    Posted 6 days ago

    Maris T

    I recommend Redman's Solicitors. Chris was very helpful and informative. He provided a speedy and efficient service at a reasonable price.

    Posted 1 week ago

    Anonymous

    quick response, friendly staff, my issue was smoothly done. superb

    Posted 2 weeks ago

    Anonymous

    Overall I was very satisfied with the service I received. Right from making initial contact to being contacted by Chris Hadrill. He was easy to talk to, friendly and professional and gave sound advice. I would certainly use Redman's again. Thank you for all your help, Chris. I would rate my experience as 5 star.

    Posted 3 weeks ago

    Jane K

    4 stars for quality of advise. the team are good but it feels rushed sometimes and hard to contact.

    Posted 4 weeks ago

    Arabella B

    I am so grateful to Caroline Lewis at Redmans Solicitor’s for helping me with my Unfair Dismissal Case. I was seriously impressed how easy Redmans made the whole case, and am very happy with my Settlement. I have recommended your firm to at least 5 people in the last 3 months.. Thank you Caroline and everyone at Redmans. You are Brilliant .

    Posted 1 month ago

    Anonymous

    Highly professional and efficient service.

    Posted 1 month ago

    Tanya T

    I had the pleasure of Chris and Sacha’s experience with a work matter. They made me feel at ease with the process and explained everything thoroughly. Would happily recommend Redmans especially Chris and use them if needed I’m the future. Thank you!

    Posted 1 month ago

    Anonymous

    I used the services of Redmans solicitors and was a quick outstanding service I engaged them in a settlement agreement after been made redundant extremely professional at all that was done and would definetly use them again

    Posted 1 month ago

    Adrian A

    Spot on support, enough to get the matter at hand sorted. No beating around the bush, no nonsense - got the job done and we all moved on.

    Posted 1 month ago

    Mark Q

    Five Stars I was most impressed by the attention, courtesy, speed and above all, professionalism in dealing with my Settlement Agreement. I would certainly have no problem in recommending this firm to anyone in need of their services.

    Posted 1 month ago

    Ade A

    I was surprisingly impressed by how Redmans Solicitors handle my case. From the moment I call them to the absolute end of my case, they always look after my best interest.

    Posted 1 month ago

    Malcolm P

    they were there when others were not

    Posted 1 month ago

    Anonymous

    Excellent service all the way through from start to finish. Really great support and guidance from the team, they secured the offer that I wanted. I can't recommend Redmans highly enough and will be sure to use their services again should the need arise.

    Posted 1 month ago

    Anonymous

    Efficient and quick service!

    Posted 2 months ago

    Karen B

    Quick response very helpful Issue raised dealt with very quickly

    Posted 2 months ago

    Carmen T

    Redmans give Great service and advice on reading contracts. They can explain all the solicitors jargon into words that you can understand. I received excellent service an I will use them again and again.

    Posted 2 months ago

    Anonymous

    Very grateful for Mel’s efforts in handling my case from start to finish which I would have found very stressful without it. She was very professional, friendly and we had a positive outcome. Highly recommend.

    Posted 2 months ago