- April 8, 2021
- Posted by: samdenis
The decision confirms that simply marking a confidentiality clause as a condition of a transaction agreement does not automatically result in a clause. Therefore, when developing or negotiating confidentiality provisions, special attention should be paid to the reasons why confidentiality is of particular importance in the current circumstances. The High Court accepted this decision and confirmed that the payment of monies earned as part of a transaction agreement cannot be avoided if an ex-employee is found to have breached a confidentiality clause, unless confidentiality is a real condition of the settlement agreement. A confidentiality clause could be explicitly subject to the condition of a COT3, especially if confidentiality is sufficiently important in the framework of the agreement, for example. B if a breach of an employer violation could pose a significant commercial risk, but the wording of that confidentiality clause was not sufficiently clear, that confidentiality was a condition of COT3. The High Court ruled that the confidentiality clause was not a condition of the contract; it was not explicitly mentioned as such and confidentiality was not the duchy`s main driver when the agreement was concluded. The judge noted that “the parties often overestimate the damages that may be caused by a relatively small breach of a confidentiality clause.” In fact, the duchy`s main objective was for Mr. Steels to renounce his claims under the agreement. Transaction agreements “do what they say on the box” – they settle charges and claims without a winner or loser, as established by a court. It is customary for transaction agreements to contain a confidentiality clause that requires both parties to keep confidential the terms of the transaction agreement and the circumstances of the termination.
As a result, transaction agreements can sometimes be characterized as confidentiality agreements, as they are often designed to prevent the disclosure of certain information. Over the past year, the focus has been on these agreements and the confidentiality clauses they contain. The High Court, which judges in Duchy Farm Kennels/Steels, confirmed that an employer could not help paying the amounts earned as part of a transaction agreement (if the worker is suspected of breaching the confidentiality clause), unless confidentiality is indeed a condition of the agreement. Confidentiality clauses are generally mutually beneficial to employers and workers and have no greater negative effects on anyone outside these parties, provided they are properly developed.