UK: Commercial Contracts Bulletin - February 2014

Last Updated: 3 March 2014
Article by Carina Healy and Jennifer Barr

WHO IS... THE WEAKEST LINK?

Flanagan and Coles v Greenbanks Limited (t/a Lazenby Insulation) & Cross [2013] EWCA Civ 1702

The Court of Appeal recently used the five key principles detailed in the case of Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm) to establish whether there had been a break in the chain of causation that resulted in a loss for one party to a contract. In the first instance, the County Court held that there was no break in the chain of causation and this was appealed. The appeal was dismissed by a 2:1 majority.

Background

In order to establish a chain of causation, a claimant must satisfy the 'but for' test on the balance of probabilities. In layman's terms, the claimant must prove that the loss would not have occurred but for the negligence of the defendant. For example, 'but for' the badly positioned road sign, you would not have crashed your car. This test will not be met if the loss would have happened regardless of the defendant's negligence or if the loss was caused by a different reason, e.g. there was a fault in the car or you were speeding.

If there is a combination of events that leads to a loss (such as the road sign and the speeding) the defendant may have been negligent (e.g. 'but for' the road sign), but the chain of causation can be broken by a different intervening act caused by the claimant or a third party (e.g. speeding). This intervening act may be due to the carelessness of the claimant or the third party; however carelessness is not a requirement for a break in the chain of causation. The court must apply the principles of the Borealis case and decide if the actions of the claimant or the third party break the chain of causation.

The Facts

Following a referral from Mr Cross, the claimants (Flanagan and Coles) had cavity wall insulation installed in their properties by Lazenby. The claimants suffered a loss by having the cavity wall insulation installed in their properties because it transpired that their properties were timber framed and accordingly were not suitable for cavity wall insulation. Mr Cross should have identified this in his initial survey; he failed to do so and he referred the claimants to Lazenby. Lazenby failed to carry out its own checks on the properties. Mr Cross argued that Lazenby's actions broke the chain of causation and therefore that he was not liable to the claimants. The Court of Appeal applied the principles of the Borealis case.

The Borealis case

The five key principles in the Borealis case are as follows:

  1. The burden of proof is on the defendant to show that there is a break in the chain, but the claimant must still prove that the defendant's breach caused their loss.
  2. To break the chain of causation, the intervening act "must constitute an event of such impact that it obliterates the wrongdoing".
  3. It is doubtful that anything less than unreasonable conduct by the claimant or third party will break the chain of causation. Recklessness would break the chain, however, there is no law stating that recklessness is required.
  4. Another important factor is the state of knowledge of the claimant or third party. The more 'actual' knowledge the claimant or third party has of the breach and the need to take remedial measures, the more likely it is that the chain of causation will be broken. On the other hand, the less the claimant knows the more likely it is that only recklessness will be enough to break the chain of causation.
  5. Establishing a break in the chain of causation is fact sensitive.

The Decision

The Court of Appeal was split by a 2:1 majority; all of the judges applied Borealis but with different approaches. Mr Cross argued that Lazenby had knowledge that previous surveys had been incorrect. The majority relied upon the part of Borealis which said, "the knowledge must be confined to a particular case" which therefore meant that Lazenby was not expected to have noticed that the survey was incorrect on this occasion. The majority also held that Lazenby was negligent (but not reckless) and that both Mr Cross' and Lazenby's errors together caused the resulting loss. Although Mr Cross argued that it was foreseeable that Lazenby would have checked the property before installing the cavity wall insulation, the court nevertheless held that this did not absolve Mr Cross of his breach. The judge in the County Court applied the principles of Borealis and decided that Mr Cross' breach was an effective cause alongside Lazenby's. In conclusion, the majority agreed with the County Court: they held that Mr Cross could not show that Lazenby's actions obliterated his own, and they dismissed the appeal.

The minority (Macur LJ), however, believed that it was correct to apply Borealis, but that the word 'obliterates' should not be interpreted so literally. Macur LJ commented, "there is no "all embracing test for what may constitute the breaking of the chain of causation". She argued that it is reasonably easy to check if a property is timber framed and that Lazenby knew that Mr Cross had previously provided incorrect surveys. For these reasons, Macur LJ held that Lazenby's negligence superseded Mr Cross' initial breach.

Comment

Borealis holds the correct principles to apply when establishing if there has been a break in the chain of causation. This case has shown differing methods of applying these principles, leaving the law in this area slightly unsettled. Essentially, each case turns on its own facts and it is more than likely that there will be further case law to follow.

OWNERLESS EMAILS: STILL NO TAKERS

Fairstar Heavy Transport N.V. v Philip Jeffrey Adkins Claranet Limited [2013] EWCA Civ 886

We commented on this case in our February 2013 Bulletin where it was decided by the High Court that it was not possible to own an e-mail. On appeal by Fairstar, the decision was overturned by the Court of Appeal which stated that, due to the existence of an agency relationship, ownership of an email was irrelevant in this case.

Facts: recap

The facts in Fairstar concerned the ownership of Fairstar's business e-mails that were sent to and from the personal e-mail account of the Chief Executive Officer, Mr Adkins. Fairstar is a Dutch company specialising in the transport of heavy cargo. Fairstar had instructed a Chinese shipyard to build several vessels. Finding itself in financial difficulty, Fairstar defaulted on payment. Consequently, the shipyard claimed that Fairstar was liable to pay a cancellation charge of US$37 million. Mr Adkins disputed that claim based on the terms of a collateral contract, presumably negotiated over e-mail. Shortly after, Fairstar was subject to a hostile takeover by the owners of a competitor, which terminated Mr Adkins' role as CEO.

In this case, Fairstar's new owners sought recovery of incoming e-mails that were automatically forwarded to Mr Adkins' private account (and deleted from Fairstar's server) and Mr Adkins' replies. Fairstar claimed a proprietary right in the e-mails' content. Fairstar stated that without access to these e-mails, it did not know what was agreed between Mr Adkins, on behalf of Fairstar, and the Chinese shipyard.

Appeal

The appeal placed greater emphasis on the principal and agency relationship which existed between Fairstar and Mr Adkins. Fairstar claimed that the content of the emails created by, or coming into the possession of, an agent while acting for the principal was the property of the principal and remained so after the termination of the agency relationship.

Fairstar put forward a number of cases relating to the duties arising from the agency relationship, in particular the duties of the agent to produce to the principal books and documents during and after the termination of the agency relationship. Fairstar focussed on a narrower claim of "agency documents" contending that Fairstar, as principal, had the right to require Mr Adkins, as agent, to produce and deliver documents held by him as their former agent so that Fairstar could inspect and copy them.

On the issue of the form of the "agency documents", Fairstar submitted that "as the contemporary world is in near-universal electronic communication" it would be "chaotic" if Fairstar was denied access simply because the materials were in a paperless form.

Fairstar added that the judge's discussion of ownership of information in letters and emails was irrelevant to the primary issue, being that Fairstar's central argument had been about right of access and not about a proprietary right to the e-mails.

HIGH COURT CONSIDERS CORRECT NOTICE PERIOD TO TERMINATE WHERE CONTRACT SILENT: HOW LONG IS TOO LONG?

Hamsard 3147 Ltd (t/a Mini Mode Childrenswear) v Boots UK Ltd [2013] EWHC 3241 (Ch), 31

In Hamsard the High Court considered what constitutes a "reasonable" notice period where the contract is silent. While this case did not establish any new law, the court set out five key principles that should be considered when deciding what a reasonable notice period is.

The Facts

Hamsard designed, manufactured and supplied children's clothes for Boots. There was no written contract documenting the arrangement, which had simply resulted from a series of earlier trading arrangements with Hamsard's predecessor company. When Hamsard stepped in, Boots and Hamsard tried, unsuccessfully, to agree a formal joint venture arrangement. The relationship between the parties broke down and Boots terminated the arrangement, giving nine months' notice. Hamsard claimed that the notice period was too short and argued that the relationship was governed by a contract between Boots and Hamsard's predecessor dating back to 2007. The 2007 contract included a termination period of 18 months and an obligation on both parties to act in good faith towards each other.

The court was faced with two issues: (i) what would amount to a reasonable period in these circumstances when the contract is silent?; and (ii) was there an implied obligation on the parties to act in good faith?

The Decision

In determining the first issue (what amounts to a reasonable notice period) the court held that five principles should be borne in mind:

  1. each decision must be made on its own facts;
  2. what amounts to "reasonable notice" should be ascertained at the time at which the notice is given;
  3. consideration should be given to the general circumstances and practices within the trade;
  4. any specific circumstances existing at the time of the contract should be taken account of; and
  5. the degree of formality in the parties' relationship is a significant factor.

These principles were applied to the facts of the case. The court found that the arrangement was informal, had no long-term future and was constantly being changed by the parties. It was clear that the arrangements would not carry on in the long term-future. Additionally, no circumstances and practices within the trade were put forward to the court as part of Hamsard's evidence. The court also held that the 18 month notice period in the 2007 contract was irrelevant because it arose from negotiations between those parties, rather than being a reflection of a "reasonable" notice period. In fact, during negotiations Hamsard had reportedly proposed a notice period of less than nine months. Finally, the arrangement between Boots and Hamsard was an interim arrangement and the relationship between the parties had broken down.

In considering these and a number of other factors, the court held that a notice period of nine months was reasonable in the circumstances.

In relation to the second issue (whether a principle of good faith applied between the parties) the court held that there was no implied obligation on the parties to act in good faith. Even if there had been, it would not be enough to impose a positive obligation on Boots to order goods from Hamsard that it did not actually want. The most that an obligation of good faith would impose would be to oblige both parties to deal on an open and collaborative basis, as was set out in the 2007 contract.

Comment

The facts and the circumstances of the case are key to deciding what amounts to a reasonable period of notice. If the contract is silent, then the five principles laid out by the High Court assist as a guide in considering what a reasonable period might be. Furthermore, the decision made it clear that an implied obligation of good faith would not oblige a party to act in a way that is detrimental to its own business. During contract negotiations, it is therefore very important to consider what notice period you would be reasonable in the circumstances, and thereafter to agree this with the other party and to ensure it is documented in your contract.

NEW CONSUMER PROTECTION RULES FOR BUSINESSES

The government has recently adopted the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the "Regulations") which will impact on businesses that contract with consumers for goods, services or digital content. The Regulations will affect contracts concluded after 13 June 2014.

Background

The Regulations are the latest in a series of new regulations which adopt measures set out in the Consumer Rights Directive (2011/83/EU) (the "Directive") which came into force on 13 December 2011 with the aim of harmonising consumer protection rules across the EU. The Consumer Rights (Payment Surcharges) Regulations 2012, which came into force on 6 April 2013, was the first of such regulations, imposing a ban on excessive consumer payment surcharges which exceed the actual cost to the business of using payment methods such as debit cards, credit cards or cheques.

It has been proposed that the remaining parts of the Directive be implemented by the Consumer Bill of Rights and the Protection from Unfair Trading (Amendment) Regulations 2013, both of which are currently in draft form.

Key Changes

From 13 June 2014, the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer's Home or Place of Work etc Regulations 2008 will be replaced. While many of the provisions will remain the same, there are a number of new rules which businesses will need to follow. For example, in respect of distance and off premises contracts (where the consumer and business are not physically located in the same place or the contract is concluded away from the business' usual place of business, such as at the consumer's home):

  1. Cancellation or cooling-off period - the Regulations extend, from 7 working days to 14 calendar days, the consumer's right to withdraw from off-premises and distance contracts. Where a business fails to give notice to a consumer of this right, the cooling-off period may be extended to as much as 12 months after the date on which it would have ended had the consumer duly received notice.
  2. Refund on cancellation - where the contract is for the sale of goods, if the consumer cancels, the goods should be returned to the business within 14 days. The consumer should be refunded within 14 days of the cancellation or receipt of the returned goods (or evidence that they have been sent). For a service contract, this should be refunded within 14 days of cancellation of the service.
  3. Supplemental agreements - cancellation of a supply contract will automatically cancel any supplemental agreements, such as additional warranties or credit agreements, provided by the business or a third party with whom the business has an arrangement.
  4. Delivery and risk - goods should be delivered (to the customer) within 30 days unless agreed otherwise with the customer. Risk passes to the customer on delivery or on collection by a courier if arranged by the customer.
  5. Payment consent - the consumer's express consent must be obtained for all payments. Businesses will no longer be able to rely on pre-ticked boxes. Consumers will not be liable for any costs of which they were unaware pre-contract.
  6. Premium numbers - where a business operates a telephone line to allow consumers to get in touch in relation to a contract, a consumer must not pay more than the basic rate. Where a consumer is charged more than the basic rate, the contract will be deemed to provide that the business must pay the difference between the amount charged to the consumer and the basic rate. The Regulations do not apply where the telephone line relates to technical support, for example, and it is clear that it is for a separate service in addition to the original contract.
  7. Digital content - the Regulations recognise a third type of contract: supply of digital content (the other types being sales contracts (for tangible goods) and service contracts). Contracts for digital content include the supply of streaming or downloadable content, for example. Suppliers of digital content will need to include information on functionality and compatibility before formation of the contract.
  8. Durable medium - prior to agreeing the contract, the consumer must be provided with the information set out in Schedule 1 (on-premises contracts) and Schedule 2 (off-premises and distance contracts) of the Regulations. In addition, where a right to cancel exists in an off-premises or distance contract, the consumer must be provided with a cancellation form in the form set out in Schedule 3 of the Regulations. This information and cancellation form should be in a 'durable medium'. The definition of durable medium includes paper or e-mail and guidance suggests that it can be a DVD/CD, a text message or 'placing' of the information in a personal account.

Comment

If your business contracts directly with consumers, now is the time to start considering how the Regulations will affect you. There are a few sectors that are exempt or partially exempt from the Regulations, so it is worthwhile checking these before embarking on a detailed review of your own terms and conditions. Also, the Regulations do not apply to 'day to day' on-premises contracts. There is no precise definition of what that means, but guidance suggests that it will mean/ extend to transactions with which consumers are considered to be familiar, such as buying a coffee or a newspaper. Furthermore, even if your business offers more favourable terms than those required under the Regulations, you still need to ensure that those terms are clearly communicated to the consumer.

THE NOT SO SECRET DIRECTIVE...

The European Commission has approved a proposal for a directive "on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure" (the "Directive"), which is designed to harmonise the law on trade secrets across the EU.

Trade secrets can be invaluable to a business. However, 25% of European companies have reported experiencing at least one case of information theft in 2013 (a rise from 18% in 2012). The proposed Directive seeks to curb this growing problem by establishing a sufficient and comparable level of redress across the EU for trade secret misappropriation.

The remedies available, the definition of "trade secret" and the laws governing what constitutes unlawful acquisition, use and disclosure vary drastically across the Member States.

The Directive therefore seeks to achieve a unified approach to all aspects of trade secret protection. It is hoped that a level playing field across the EU will reduce the negative impact that the varying levels of trade secret protection are perceived to have on cross-border co-operation between business and research partners.

The Proposed Directive

Fundamentally – what is a trade secret? The Directive defines a "trade secret" as being information which meets each of the following criteria:

  • it is "secret" in that it is not (whether as a whole or in the precise configuration and assembly of its parts) generally known among, or readily accessible to, persons who normally deal with that kind of information;
  • it has commercial value because it is secret; and
  • under the circumstances, it has been subject to reasonable steps to keep it secret.

This definition mirrors the definition of "undisclosed information" which all members of the World Trade Organisation are obliged to protect under the Agreement on Trade-related Aspects of Intellectual Property Rights ("TRIPS"). It should therefore be familiar to those operating in the EU.

A trade secret will be acquired unlawfully where there is unauthorised access to, or copying of, material through theft, deception or breach of a duty or agreement of confidentiality.

Other means of acquiring a trade secret will also be unlawful where it is "considered in the circumstances contrary to honest commercial practices". The Directive restricts the use and disclosure of unlawfully acquired trade secrets, as well as making unlawful the use of any unlawfully acquired trade secret to produce infringing goods or the sale, import, export or storage of such infringing goods. The key element in determining whether an acquisition or use is unlawful is lack of consent of the rightful trade secret holder.

Member States are however required to ensure that, where legitimate use is being made of the right to freedom of expression or information, or where the secret was disclosed as part of a legitimate exercise by a workers' representative in representing workers, or for the purpose of protecting some "legitimate interest", there will be no entitlement to the relevant remedies, procedures or measures.

Available remedies

Competent judicial authorities in each Member State must determine whether claims for trade secret violations brought within the limitation period (to be a minimum of one year and a maximum of two years) are justified and whether sanctions should be imposed. Any measures, procedures or remedies must be fair and equitable, effective and dissuasive and not unnecessarily complicated. Further, their application must be proportionate and avoid the creation of barriers to trade in the internal market.

Provisional and precautionary measures (such as an interim prohibition on the use or disclosure of trade secrets or the marketing of infringing goods, or the seizure of suspected infringing goods) can be awarded, although these are subject to a number of conditions and safeguards under the Directive.

Following determination on the full merits of the case, the possible remedies available include:

  • injunctions against use or disclosure of the trade secret;
  • withdrawal of infringing goods from the market;
  • destruction of infringing goods; and/or
  • where the person acquired knowledge of the trade secret in good faith, pecuniary compensation may be available instead of an injunction.

The Directive also prescribes the method for determining damages to be awarded for prejudice suffered by the trade secret holder. Damages must be "commensurate to the actual prejudice suffered", taking into account lost profits and unfair profits or, where appropriate, equivalent to the royalties or fees that would have been due.

Although criminal sanctions were considered by the Commission at an earlier stage, they have not been included in the draft Directive.

Court disclosures

The Directive provides for the protection of trade secrets disclosed in the course of legal proceedings, to ensure consistency in this regard across the Member States. Judicial authorities may compel those involved in a case not to disclose or use trade secrets revealed during the litigation. The possible measures that may be used by courts to preserve confidentiality include:

  • restricting access to documents that contain trade secrets;
  • restricting access to hearings and hearing records; and
  • preparing non-confidential versions of judicial decisions.

The UK position

Trade secrets are currently protected under common law in the UK with the law advancing on a case-by-case basis. Although the position under the Directive will be very similar to the current UK position, application of the new Directive, both in the UK and across other Member States, is likely to lead to some change in the UK interpretation of the law. One area where it is particularly unclear as to how much the proposed Directive will assist is confidential information in the employment context. There has been much litigation concerning when and what information obtained during the course of employment can be lawfully used or disclosed. UK courts tend to divide information obtained during employment into the following three categories:

  1. Non-confidential information that is available to the public in general or on request.
  2. Information that is confidential during employment but not after the employment has terminated. For example, an employee cannot be restricted from using information regarding the structure of the employer's business, or general business methods which fall within the employee's skill and knowledge, once the employment has ended.
  3. Information constituting genuine trade secrets which remains confidential even after termination of employment.

Litigation on where the division lies between these three categories is likely to continue, even after implementation of the Directive.

Next steps

The Directive will now be passed to the Council of Ministers and the European Parliament for debate and adoption, with the new measures expected to be put in place within four years.

YOU CAN'T HAVE YOUR CAKE AND EAT IT TOO. . .

Caterpillar (NI) Ltd v John Holt & Company (Liverpool) Ltd [2013] EWCA Civ 1232

It has been decided that a seller cannot make a claim for price when there is a retention of title clause.

The Case

This case related to a contract between John Holt and Company ("John Holt") and Caterpillar (NI) Ltd (formerly known as FG Wilson (Engineering) Limited) ("Caterpillar"). The nature of their relationship was the supply and sale of goods by Caterpillar to John Holt, who would then export those goods to a subsidiary company in Nigeria.

The agreed trading terms included specific points on payment, whereby payment was to be made by John Holt in the fourth (and later extended to fifth) month after the issue of an invoice. The contract also included Caterpillar's standard conditions of business which contained more typical clauses including:

  • a retention of title clause stating that "title did not pass to the buyer until payment was made and, until such time, the buyer shall hold the products as the seller's fiduciary agent and, prior to the title passing, the buyer may use or sell the products in the ordinary course of business and must account to the seller for the proceeds"; and
  • a relationship of the parties clause stating that "nothing contained in the contract should be deemed to create an agent relationship".

In this case, after a number of unpaid invoices and a failed repayment plan, Caterpillar brought a claim totalling $12.6m against John Holt. The goods that were the subject of the unpaid invoices had, due to the nature of the business of John Holt, already been resold to John Holt's subsidiary in Nigeria. Section 49 of the Sale of Goods Act ("SOGA") states that a seller can make an action for price in two circumstances.

Firstly, where the property in the goods has passed to the buyer and secondly, where the contract states a day for payment irrespective of delivery and the buyer wrongfully neglects or refuses to pay the price.

The Court had to decide (amongst other points) whether title passed in light of the retention of title clause and, as a result of this, whether Caterpillar could make an action for payment under section 49 of SOGA.

The Decision

At the High Court, the judge rejected an assertion made by counsel for John Holt that John Holt had resold the goods as agent for Caterpillar, instead deciding that property in the goods only passed to John Holt at the time that they were re-sold to the subsidiary company. Accordingly, the Court held that Caterpillar could maintain an action for price under section 49 of SOGA.

The Appeal

John Holt appealed the case and at the Court of Appeal it was: held unanimously that the conditions in section 49 were exhaustive and must be satisfied in order to make a claim for payment; and held by a majority that title to the goods had not passed to John Holt. In reaching a decision on this second point, the majority (Lord Justice Patten and Lord Justice Floyd) noted that the retention of title clause operated to ensure the title stayed with Caterpillar until payment was made and, although John Holt was not acting as fiduciary agent by merely just having the goods, the wording of the clause was consistent with a fiduciary principal/agent relationship whereby John Holt was entitled to sell the goods but was required to account for the proceeds of that sale. Accordingly John Holt, on re-sale of the goods, was acting as agent for Caterpillar.

The Future

The claimants now have permission to appeal and the case is due to be heard in the Supreme Court in June this year. We will provide an update on the outcome in due course. In the meantime, this case serves to again reinforce the importance of careful drafting. Lord Justice Longmore (despite being the minority opinion in this case) reminded us that the duty of the court is to 'construe the clause in the contract before it and not to get bogged down in comparing with other clauses in other cases'. The moral of the story is to try and ensure that each clause in your contract does exactly what it is intended to do.

ONE CONTRACT: TWO PLACES

In modern commercial contract practice, it is common for contracts to be negotiated, agreed and finalised through electronic means (most commonly by way of phone or email). In addition, in an international context, it is often the case that parties are unable to agree on a choice of law or jurisdiction to govern their contract. Sometimes they agree not to specify these dates in the contact in order to conclude the agreement without further delay. The potential combined effect of these practices was explored by the High Court in the recent case of Conductive Inkjet Technology Ltd. V Uni-Pixel Displays Inc.[2013] EWHC 2968 (Ch) whereby the Court confirmed that it is possible for a contract to have been formed in two jurisdictions.

Facts

Conductive Inkjet Technology ("CIT"), an English company, and Uni-Pixel Displays Inc ("UPD"), a Texan company, negotiated and agreed a non-disclosure agreement ("NDA") in 2005 prior to the exchange of sensitive commercial information. The parties had been unable to agree upon a choice of law or jurisdiction and so, intentionally, did not include one in the NDA. It was also significant that the NDA was finalised by way of email and executed remotely by the parties.

A dispute then arose after the publication of patent applications lodged by UPD. CIT alleged that the content of those applications pointed to a reliance on sensitive commercial information as was disclosed to UPD under the protection of the NDA. To this end, CIT brought proceedings against UPD in the English Courts for both a breach of the NDA and a declaration that it be granted those resulting patents or (at least) an interest in them. UPD disputed the jurisdiction of the English Courts to hear the claims.

Decision

It was not disputed that the parties had failed to agree on (or incorporate) a choice of law or jurisdiction clause in relation to the NDA. Legal precedent dictates that the Courts should then look to the place of formation to establish jurisdiction. Yet, in this case the Court acknowledged the artificiality of such a determination, as it would have fallen to which party physically posted the fully executed contract. In reality the NDA had been negotiated in parallel, in both England and Texas, and agreed by way of an international email exchange. This rationale is potentially applicable to the majority of international contract negotiations.

Therefore, the High Court affirmed that the contract was capable of having been established in either jurisdiction and accordingly the English Courts had jurisdiction over UPD in respect of the ongoing actions by CIT. The commercial "common sense" of the judgement is acknowledged, but it is overshadowed somewhat by the consequential legal uncertainty.

It should be noted that the Court considered it "very significant" that the patent claim required to be heard in the English Courts and that, as a result of the significant overlap in the claims, the inconvenience and expense of parallel litigation was contrary to the interests of justice. That is not to say the judgement would necessarily have been different if the patent claim had been more transferrable: the judgement's reasoning stands independently of this fact. However, perhaps it may have been different if that claim had been linked more closely with Texas.

Comment

The context of this decision should not be lost; the situation could have been avoided by the parties if a choice of law/ jurisdiction clause had been agreed between them at the negotiation stage. Admittedly, this is often a contentious issue, but that is often the nature of contract negotiations. As you would 'stand your ground' on other aspects of the contract, you should avoid the temptation to side step this boilerplate provision and, in doing so, expose yourself to the risk of being drawn into unpredictable and expensive foreign legal proceedings. A contract cannot negate the risk of a dispute arising, but it can assist you to contain the costs that you will be met with, and the control that you will have, should one arise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.