Excite and offend a reasonable man’s conscience

for whom the bell tollsQuiz question: pair the following quotations with the correct source:

1. Never send to know for whom the bell tolls: it tolls for thee.

2. I would not make windows into men’s souls.

3. It would plainly excite and offend a reasonable man’s conscience.

A. Ascribed to Queen Elizabeth I in relation to religious conformity, but actually a variation of a comment in a letter written by Francis Walsingham in 1590.

B. Part of a court judgment by Mr Justice Hildyard in the English High Court in 2014, on the subject of confidentiality agreements.

C. Part of a Prose Meditation by John Donne, written in 1624.

Answer: 1C, 2A, 3B.

At least, IP Draughts assumes that Mr Justice Hildyard made up the phrase at item 3, rather than quoting from someone else. No indication of a quotation is given in the case, CF Partners (UK) Llp v Barclays Bank Plc & Anor [2014] EWHC 3049. The judgment was published on 24 September 2014.

The issue that the judge was discussing when he came up with this sonorous phrase was whether a person could be simultaneously bound by a contractual duty of confidentiality and an equitable duty of confidentiality, and whether the equitable duty might be broader than the contractual one, eg by lasting longer than the contractual one. Some of his comments on this aspect appear around paragraph 130 of the judgment, and include the following text:

 

Contractual obligations and equitable duties may co-exist: the one does not necessarily trump, exclude or extinguish the other…

However, where the parties have specified the information to be treated as confidential and/or the extent and duration of the obligations in respect of it, the court will not ordinarily superimpose additional or more extensive equitable obligations…

Nevertheless, that does not preclude wider equitable duties of confidence in circumstances that are not ordinary. For example, as it seems to me, a circumstance could arise where the obligations of the parties in respect of information with the quality of confidentiality are not clearly prescribed or governed by the contractual terms but where the use of certain information would plainly excite and offend a reasonable man’s conscience. In such circumstances, as it seems to me, an equitable duty not to use the information having that quality would be recognised, even if that went further than the definition, duration or restraint prescribed by the contract.

If you want to stop misuse of confidential information, hire this chap

If you want to stop misuse of confidential information, hire this chap

This is an interesting clarification of how contractual and equitable duties of confidence might run in parallel. Later in the judgment (eg see paragraph 1308(3)) the judge decides that certain one year and two year contractual limits on the duration of confidentiality obligations did not apply to the equitable duties. But the case should not, in IP Draughts’ view, be used as a comforting thought when one cannot persuade the other party in negotiations to agree to a suitably long period of confidentiality. Rather, this is a safety valve for extreme situations, as decided by one High Court judge. See earlier posts on this blog about the terms and term of confidentiality agreements.

The case itself is an unbelievably long saga about whether Barclays Bank misused confidential information about a proposed financial transaction, breached exclusivity obligations, jumped over Chinese walls, and generally behaved in the way described in a report by Antony Salz (a former senior partner of Freshfields) on Barclays’ business practices as “institutional cleverness, taken with …edginess and a strong desire to win …which was identified as characteristic and productive of less than ideal outcomes”. The trial lasted for 34 days and the judgment extends to 1310 numbered paragraphs plus appendices. The judge reports that Barclays’ legal costs were in the region of £10 million, and that the case was “litigation on a grand scale”.

Readers who wish to understand the confidentiality aspects of the case may wish to focus on paragraph 877 onwards.

The message that IP Draughts takes from this case is not to trust people in financial institutions where large amounts of money are at stake, no matter how many compliance policies and compliance officers the institution may have. But you knew that anyway…

2 Comments

Filed under Confidentiality

2 responses to “Excite and offend a reasonable man’s conscience

  1. vrkoven

    In the US, we don’t have a pithy phrase like that, but we do have an unwieldy word, “unconscionable,” that basically does the same work: a contract term(in this case, in a contract for the sale of goods, covered by our Uniform Commercial Code) will not be enforced if it, well, “plainly excite[s] and offend[s] a reasonable [person]’s conscience” (interesting that in the UK in 2014 a judge would feel free not to mind the gender gap).

    Also, while I’m not aware of cases contemplating a conflict between contract and equity (though there may be some–this is all a matter of state law here), we do have a very real problem of conflict between contract and statute, a different uniform one called the Uniform Trade Secrets Act. A nondisclosure agreement may set up fixed time limits after which information goes “stale” and is free from restriction (a sensible thing to do for commercial and ordinary business information), the UTSA has such a broad definition of “trade secret” that unless, as is seldom the case, it is specifically excluded from application (the efficacy of which is open to some doubt), it’s conceivable that the contract could be disregarded and the information protected indefinitely. Caveat receptor!

    • Thanks, Vance, interesting. That may help to explain why, in negotiations, disclosing parties are sometimes willing to make an exception to a very short period of confidentiality in the case of disclosure of trade secrets. Perhaps the underlying US law on trade secrets informs this acceptance, whether or not the individual lawyer who accepts it realises it (they may just be doing what they have seen before).

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