December 19, 2014

Confidential information and delivery up

The director’s service agreement required all information acquired during his appointment which was confidential must not be disclosed to third parties, or used for any reason other than in the interest of the company without prior clearance. However there was no express term requiring him to deliver up confidential documents when his employment ended. The High Court concluded that if this had been the obvious but unexpressed intention, one would have expected to have seen it expressly stated in the contract. However it was not. Furthermore there was no evidence of any legal authority, code of practice or other guidance which would suggest that delivery up was a normal requirement of directors. The Court took the view that it would be difficult for directors with multiple directorships to comply with a implied requirement especially where documents are emailed to a number of different email addresses with which the director is associated. The Court did not see that business efficacy could be achieved by implying a term to deliver up documents which might achieve very little for a considerable amount of work. Consequently it considered that there was no reasonable prospect of a claim for relief based on an implied term requiring delivery up succeeding.

This case demonstrates yet again the importance of insuring the wording of contracts is appropriate to cover the required eventualities.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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