Commercial news vlog - November 2019: An unreasonable restraint of trade, An employee’s right to compensation for inventions and Barclays pays $6m to end US SEC's foreign bribery claim

Commercial news vlog - November 2019: An unreasonable restraint of trade, An employee’s right to compensation for inventions and Barclays pays $6m to end US SEC's foreign bribery claim

In association with Iain Larkins from Radius Law, we bring you updates across Corporate & Commercial, Data Security, Employment, Consumer and Competition law.

We focus on the commercial aspects and look at the practical steps for you to consider.

This month, we cover the following...

Corporate & Commercial

An unreasonable restraint of trade

It’s established law that any contract that restricts another party’s freedom to trade must be limited to what’s reasonable.

The Court has ruled in a recent case that a sports management contract that tied a racing driver in for 18 years whilst allowing the management company a one-month exit at any-time and that effectively excluded any other meaningful input into the development of his career – was not reasonable and was therefore an unlawful restraint of trade.  The argument that it was the norm in the industry did not persuade the Court – the fact that others have signed unreasonable contracts did not make this one reasonable. 

See News Analysis: When will a commercial contract amount to an unreasonable restraint of trade? (CJ Motorsport Consulting Ltd v Bird and another)

When can a party claim negotiating damages?

It can be difficult to value a claim that relates to the breach of a restriction.  One solution is to value the claim by the hypothetical additional value that would have been payable for the contract without the restriction.  This is known as ‘negotiating damages’.   In a recent case concerning the sale of a ship on the condition that the buyer would only use it for scrap metal, the seller claimed ‘negotiating damages’ when the buyer breached that condition.  The Court allowed an injunction to stop further breaches but refused ‘negotiating damages’ for the past breaches and, instead, only awarded nominal compensation. The Court said that negotiating damages will only be available where there has been a breach of contract and that breach results in the loss of the asset that’s protected by the contractual right (such as a breach of a confidentiality clause).   This was not the case here.  The ship had already been sold and therefore the trading of that ship did not involve the buyer taking or using something in which the seller had an interest.

See News Analysis: Breach of a negative covenant—injunction granted/no negotiating damages (Priyanka Shipping Ltd v Glory Bulk Shipping Pte Ltd)

Unjust enrichment

The case of AMP Advisory (‘AMP’) and Force India Formula One Team (FI) concerned AMP’s claim that FI had breached an unsigned contract to pay introductory commission on a sponsorship deal. AMP’s claim failed because the correspondence showed that AMP had continually, but unsuccessfully, insisted that FI sign its contract.  It was then difficult for AMP to argue that the lack of a signed contract did not matter.

AMP was however partly successful in its claim for unjust enrichment by proving it had been involved, albeit in a limited way, for the successful conclusion of the sponsorship and that without some payment to AMP, FI would be unjustly enriched.  The Court decided that AMP should be paid £150,000– significantly less than the £9m commission that AMP had been seeking.  It is worth noting that if AMP been able to prove that it was wholly responsible for the introduction of the sponsorship the unjust enrichment claim is likely to have been significantly higher.

See News Analysis: Risky business—oral contracts, partially concluded agreements and quantum meruit claims (AMP v Force India)

Payment reporting

For more than two years now, large businesses have been legally obliged to publish their payment performance twice-yearly. Fines can be imposed on companies and their directors. The recent Business Confidence Monitor report has however noted that there has been a rise of 25% in late payments since the previous year.

RPI to be aligned

The government has announced that RPI will be changed to match CPIH on a date between 2025 and 2030. CPIH is the Consumer Price Index including owner occupier’s housing costs. It is about 1% lower than RPI.  Businesses should therefore start to consider the impact of these changes on any RPI linked contracts.  

See LNB News: UK Statistics Authority ‘regrets’ no changes will be made to RPI before 2025

Electronic signatures

The Law Commission’s report published in September has confirmed that e-signatures are an acceptable way of completing contracts, including deeds and land contracts, but where there is a requirement to have a witness, the witness must be physically present with the signatory contracting parties can still agree to only use particular forms of signature; there are still some, very limited, legislative requirements that arguably still require wet ink signatures.

The Commission has recommended that there are new laws to provide more clarity on e-signatures and that there is a review of deeds generally to consider whether the requirement for a witness is now outdated.

Interestingly, within days of the Law Commission’s report the Court ruled that a property contract contained in a series of emails had been held been validly signed by a solicitor.

See News Analysis: A sign of the times—automatic signatures and formality requirements (Neocleous v Rees)

Data security

Have the floodgates for data privacy class actions been opened?

The Court of Appeal has allowed an ‘opt-out’ class action claim to proceed against Google.  The claim alleges that Google breached data protection laws by its collection and sale of iPhone users’ internet browsing data, without consent.

The Court of Appeal agreed that compensation should be available for ‘loss of control of data’ even where there has not been any financial loss. The claim value is £750 per iPhone user – there are 4.4 million of them.

Shortly after this decision a second data breach class action has been issued against the credit reference agency Equifax

See case report: Lloyd v Google LLC

Time to check cookie consent policies

In our September Bulletin we reported on the new ICO guidance that all non-essential website cookies will need active consent.  This is likely to mean that most websites are non-compliant.

A European Court decision has since supported the ICO guidance by confirming that that storing cookies requires internet users' active consent. It’s worth noting that the Court also confirmed Cookie consent rules apply to all data, not only personal data.

See News Analysis: Judgment confirms cookie consent cannot be based on pre-ticked boxes and information to be given (Bundesverband der Verbraucherzentralen und Verbraucherverbände Verbraucherzentrale Bundesverband eV v Planet49 GmbH)

Advertising & Marketing

An employee’s right to compensation for inventions

Employees have a right to compensation for any of their patented inventions which lead to an outstanding benefit for their employers.  The recent case of Shanks v Unilever has shed some light on what’s considered an outstanding benefit.  In this case the invention led to a net profit of £24m.  The Supreme Court agreed that Shanks was entitled to a 5% share of the net profit dismissing an earlier decision that held his invention could not be considered outstanding because it ‘had no significant impact on its overall profitability [of Unilever].

See News Analysis: Supreme Court—inventor entitled to fair share from employer of £2m (Shanks v Unilever Plc and others)

Aldi’s copycat brand stopped

Aldi is well known for its slogan ‘Like brands, only cheaper’, but has now been ordered to change its packaging for its ‘Broadway Shape and Glow’ makeup - the similarities with the Charlotte Tilbury’s high-end makeup palette were substantial and therefore a breach of copyright.

See News Analysis: Islestarr succeeds in copyright action against Aldi (Islestarr v Aldi)


No cherry-picking of legal privilege

A recent case has held that an employer cannot cherry pick whether to waive legal privilege. In this case the employer wanted to disclose some advice that it felt supported its case whilst stopping the disclosure of other legal advice that the employee had seen by accident.  The Employment Appeal Tribunal determined that by disclosing some legal advice – the employer had waived privilege in all of the advice.

See News Analysis: When privilege may be waived in advice documents relating to a dismissal (Kasongo v Humanscale UK)

Whistle blowing – the public interest text

Whistle blowers are entitled to protection for certain ‘qualifying disclosures’. To be a qualifying disclosure it must be in the public interest. The Employment Appeal Tribunal has found that a charity worker whose work involved processing sensitive personal data was acting in the public interest when she complained about a lack of data security controls.  The earlier Tribunal was therefore incorrect to find that these were simply ‘personal contract matters’.

See Transcript: Okwu v Rise Community Action

The joke that cost £5,000

A tribunal has ruled that subjecting an employee to sexual inuendo can be sexual harassment even if the intention was not to offend and even if the employee does not complain at the time.  The employee in this case was awarded £5,000.

New best practice guidance on use of confidentiality agreements in discrimination cases

The Equality and Human Rights Commission has published new Guidance on the use of confidentiality clauses in discrimination cases. The recommendations include that confidentiality clauses should only be included in settlement agreements after careful consideration. It’s also advised that confidentiality agreements are subject to Board oversight and that a central record of such agreements is maintained.

See LNB News: New EHRC guidance on NDAs in discrimination cases ‘should encourage employers to think carefully’

Bribery & Corruption

Barclays pays $6m to end US SEC's foreign bribery claims

Barclays PLC has agreed to pay $6m for allowing the hire of more than 100 friends and relatives of government officials in Asia, the US Securities and Exchange Commission has said.

It’s reported that Barclays lacked adequate internal controls to keep employees from using hires as bribes and it’s understood that a senior regional compliance executive admitted that he never read the anti-bribery and corruption policy.

See News Analysis: Barclays pays $6m to end US SEC's foreign bribery claims.

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About the author:

Louisa leads marketing for the in-house legal community at LexisNexis. She joined the dedicated in-house team at LexisNexis four years ago and has a passion for driving and facilitating initiatives which are customer-focused at their heart. Her vision is to support in-house counsel succeed in their fast-evolving role based on deep insight, data analysis and best practice gathered across the in-house community.

Prior to her in-house focused role, Louisa led the marketing for the bar and mid-market private practice sectors as well as product marketing lead for LexisPSL - LexisNexis' cloud based, practical guidance and legal research software solution.

She brings 20 years' marketing experience both client and agency side, specialising in B2B marketing in the Legal, TMT (Telco, Media and Technology) and Financial Services industries. In both South Africa, Europe and the UK.

Louisa is also an active member on the LexisNexis Gender Equality Matters (GEM) steering committee and is involved with the Families at LexisNexis Group which brings together, supports and lobbies for change those with an interest in balancing the challenges of work and family.