United States: Battle On The Bench

Our legal system operates on the expectation that there is a rule of law that stands as a clear and unambiguous guidepost for retrospectively judging the conduct of our personal and business affairs.  However, that assumption is regularly and routinely tested by the fact that our judges often cannot agree on the application of the law to an undisputed and finite set of facts.

A recent decision by the Appellate Division in Wyle Inc. v. ITT Corp., 2015 NY Slip Op 05877 (decided on July 7, 2015), illustrates the enigma where the three-judge majority (Mazzarelli, J.P., DeGrasse and Mazonet-Daniels, J.J.) and the lone dissenter (Moskowitz, J.J.)  emphatically debated and categorically disagreed on the legal standard to be applied to the undisputed documentary facts.

The First Department majority held that Supreme Court "properly concluded that the [plaintiff's] fraudulent inducement claim was not duplicative of the breach of contract claim".  However, the dissent countered that:

The issue presented in this case is far less clear cut than the majority memorandum would suggest. In fact, when considering whether a misrepresentation of a contractual warranty can sufficiently support a separate cause of action for fraud, or whether the allegation of a fraudulent misrepresentation merely duplicates a claim for breach of contract, this Court has reached different results depending on the specific facts presented. Because I believe that under the applicable line of cases, the misrepresentation here supports a claim for breach of contract but not a separate claim for fraud, I respectfully dissent.

The facts of the case were set forth in the dissent:

This action arises from alleged misrepresentations by defendant ITT Corporation in connection with its sale of nonparty CAS, Inc. to plaintiffs Wyle Inc. and Wyle Services Corporation (collectively, Wyle). According to the allegations in the complaint, ITT acquired CAS's parent company, nonparty EDO Corporation, but planned to sell CAS, as CAS was not profitable for ITT's business.

CAS, a defense contractor, provided engineering, scientific, and technical services to the federal government, and earned most of its revenue through defense contracts with the government. Payment for CAS's work under its contracts with the federal government was governed by a Professional Engineering Services schedule (PES schedule), which CAS negotiated with the government's General Services Administration (GSA). A PES schedule set forth the basic terms and conditions, including pricing and rate ceilings, by which the federal government was permitted to buy commercial products and services from companies holding the PES schedule. PES schedules generally had a defined period of performance, and gave the GSA the option to extend the period. Further, the GSA had the right to audit the PES schedules and adjust the rates set forth in them. Although contracting officers from the GSA usually performed the audits, the GSA's Office of Inspector General (OIG) would occasionally become involved. Audits by the OIG typically resulted in rate reductions, and therefore negatively affected the profitability of a contractor's business.

Plaintiff alleges that in early 2010, the GSA notified CAS that it intended to extend one of CAS's PES schedules, which provided the labor rates for CAS's largest contract with the government. The GSA requested that CAS submit new proposed rates, and CAS did so. On March 1, 2010, the OIG sent CAS a letter apprising CAS that the government had chosen CAS's PES schedule for a "pre-award" audit.

During the OIG audit, Wyle decided to buy CAS. The terms of the sale were memorialized in a Stock Purchase Agreement (SPA), dated August 7, 2010, under which Wyle agreed to pay EDO $235 million to acquire all of CAS's capital stock. Before agreeing to pay the purchase price, however, Wyle insisted that EDO agree to a series of representations allegedly designed to ensure that the potential risks associated with CAS's government contracts were disclosed. According to Wyle, these representations were important because anything that could negatively affect CAS would impair the value of the company.

Thus, Wyle alleged in the complaint, Wyle required EDO to disclose all audits that were ongoing when the parties entered into the contract. Specifically, Article III of the SPA governs "Representations and Warranties of the Seller [i.e., EDO] and the Company [i.e., CAS]." The SPA required EDO and CAS to make certain representations and warranties, including a representation that CAS would disclose whether any of its contracts were under audit as of the date of the SPA. To that end, the SPA stated:

"Section 3.15(c)(v) of the [accompanying] Company Disclosure Schedule lists each Government Contract or Government Bid to which the Company is a party which, to the Company's knowledge, is as of the date hereof under audit by any Governmental Authority or any other Person that is a party to such Government Contract or Government Bid."

EDO, however, allegedly failed to disclose OIG's ongoing audit.

Ultimately, the sale transaction closed on September 8, 2010, without disclosure of the OIG audit. Six months later, on March 4, 2011, GSA announced the results of OIG's audit; the audit resulted in rates lower than CAS had submitted for the new PES schedule and a rate reduction under the then-current PES schedule, which was not due to expire until April 2011. CAS signed the new schedule on March 23, 2011.

In December 2011, after unsuccessful demands for contractual indemnification of the loses arising from EDO's breach of section 3.15(c)(v) of the SPA, Wyle commenced this action, asserting a breach of contract claim for breaching the warranty that required disclosure of the OIG audit, and for refusing to indemnify Wyle for losses caused by that breach. Wyle argued that had it known about the OIG audit, it would have paid less for CAS. By order entered November 14, 2012, the court granted ITT's motion to dismiss the complaint, concluding that Wyle failed to comply with the notice requirements of the indemnification clause.

Pending an appeal from that order, Wyle amended its complaint to add a second cause of action for fraudulent inducement, the subject of this appeal. In the amended complaint, Wyle alleged that ITT had misrepresented in the SPA that all ongoing audits of every CAS government contract had been disclosed and that, relying on that misrepresentation, Wyle was induced to enter into the agreement and sustained damages in an amount more than $20 million. Wyle also sought punitive damages.

In April 2013, ITT moved to dismiss the amended complaint, arguing that the fraud claim was duplicative of the breach of contract claim because the alleged misrepresentation was a misrepresentation in the SPA itself, and was not collateral to the contract. In opposition, Wyle argued that the misrepresentation was one of present fact, and that the misrepresentation of present fact had induced it to enter into the contract. Wyle also pointed out that the notice requirements in the indemnification clause did not apply to situations of intentional misrepresentation or fraud. Further, Wyle argued, ITT had "superior knowledge" of the OIG audit and had made a partial, and thus misleading, disclosure.

The dissent described the prior proceedings:

In October 2013, the motion court denied ITT's motion to dismiss the fraud claim. The court concluded that ITT's misrepresentation of the existence of the OIG audit was one of present fact, and not one of future performance. The motion court also noted that a warranty was not a promise of performance, but one of present fact, and that a fraud claim can be based on a breach of contractual warranties. The court also found that Wyle had sufficiently pleaded justifiable reliance and damages.

By a decision dated February 18, 2014, this Court reversed the motion court's November 2012 order and reinstated the breach of contract claim, finding that the indemnification clause applied...In so doing, we found that Wyle had stated a claim because the indemnification clause "excuses late notice by providing that no limitation or condition of liability provided for in this Article VIII shall apply in the event of...intentional misrepresentation"...We further noted that ITT had "deliberately kept Wyle from learning about the audit before the sale, which constitutes intentional misrepresentation"[.].

And the dissent then cited the applicable law:

ITT concedes that its alleged misrepresentation — namely, its failure to disclose existence of the OIG audit — was one of present fact. The parties, however, dispute whether the misrepresentation was collateral to the SPA, or rather, whether it was part of the SPA itself. ITT argues that without allegation of a misrepresentation collateral and extraneous to the contract, the claim was essentially a breach of contract claim, and the motion court should have dismissed it. ITT also asserts that Wyle sought the same measure of damages for both its breach of contract and fraud claims.

For its part, Wyle points to case law holding that misrepresentation of a contractual warranty constitutes a misrepresentation collateral to the contract. Wyle also asserts that the SPA itself contemplates a separate claim for fraud based on any intentional misrepresentation in the SPA, as the indemnification clause provides that the contractual damages and indemnification limitations do not apply "in the event of fraud or intentional misrepresentation." Finally, Wyle notes that the damages it seeks on the fraud claim are different from damages sought from the breach of contract claim, as it also seeks punitive damages.

To state a claim for fraudulent inducement, a plaintiff must allege "a knowing misrepresentation of material present fact, which is intended to deceive another party and induce that party to act on it, resulting in injury"[.]

This Court has produced two lines of cases addressing breach of contract claims vis-a-vis fraud claims. One line of cases holds that a fraud claim is duplicative of a breach of contract claim where the fraud claim arises wholly from the written provisions of an agreement. For example, in J.E. Morgan Knitting Mills v Reeves Bros. (243 AD2d 422 [1st Dept 1997]), we held that the cause of action for fraud, alleging that the defendants had deliberately given false warranties that there were no undisclosed liabilities burdening the property, was properly dismissed as duplicative of the plaintiffs' cause of action for breach of contract. In so holding, we noted that the fraud alleged was based on the same facts as those that underlay the contract claim, and thus, were "not collateral to the contract," and that plaintiff had alleged "no damages...that would not be recoverable under a contract measure of damages"[.]

Likewise, in ESBE Holdings, Inc. v Vanquish Acquisition Partners, LLC (50 AD3d 397 [1st Dept 2008]), we dismissed a fraud claim as duplicative of a breach of contract claim, as the fraud claim "arose directly from the written provisions" of the agreements; thus, the only misrepresentations appeared in the contract itself...Moreover, we held, there was no merit to the plaintiffs' contention that many of the alleged misrepresentations were extraneous to the contract, as none of the misrepresentations caused the actual investment losses[.]

We took a similar view in RGH Liquidating Trust v Deloitte & Touche LLP (47 AD3d 516 [1st Dept 2008], lv dismissed 11 NY3d 804 [2008]), where we found that the motion court had properly dismissed the plaintiff's fraud claims as duplicative of the breach of contract claim. In so doing, we found that the fraud claims were based on allegedly fraudulent misrepresentations regarding the defendants' obligation under their agreements with the debtors to conduct audits of financial statements with reasonable care, but alleged no misrepresentations collateral or extraneous to the agreements[.]

On the other hand, another line of cases has applied the principle that a fraud claim can be maintained even where it is based on conduct that has some relation to the facts of a breach of contract claim. However, in that line of cases, courts have been obliged to look outside the contracts to determine whether the defendant had made an actionable misrepresentation. Stated another way, in cases where the plaintiffs were permitted to advance a separate fraud cause of action, the misrepresentations concerned matters outside the text of the parties' contracts.

For example, in First Bank of Ams. v Motor Car Funding (257 AD2d 287 [1st Dept 1999])...the plaintiff alleged in the complaint that it had bought car loans from the named defendant. The contract between the parties in First Bank gave the plaintiff a right to purchase certain loans over a period of time. In the contract, the defendant warranted that the loans would conform to certain underwriting guidelines. The allegedly false representations, however, concerned collateral for the loans; the plaintiff alleged that the defendants made the false representations after the parties had signed the contract, when the defendant sold the loans to the plaintiff[.]

Thus, in First Bank, the fraud claim was based upon representations entirely separate from the ones in the contract. Here, in contrast to the situation in First Bank, the duty to disclose the audit arose solely from the terms of the parties' agreement. Therefore, the fraud cause of action here presents no duty separate from, or in addition to, the one created by the contract documents. On the contrary, the second cause of action is based on a duty having its only origin in the SPA; according to the SPA, ITT promised to inform Wyle of any ongoing audits, yet it did not so do. Thus, this case differs from First Bank in that Wyle alleges no misrepresentation outside the scope of the contract.

Similarly, in MBIA Ins. Corp. v Countrywide Home Loans, Inc. (87 AD3d 287 [1st Dept 2011]), the relevant misrepresentations were extraneous to the contract itself. In MBIA, the plaintiff entered into multiple insurance contracts with the defendants, agreeing to provide financial guarantee insurance for certain mortgage-backed securities that the defendant had sold to investors. After the defendants were unable to meet their payment obligations on those securities, the plaintiff was forced to pay out on its insurance policies. In its action against the defendants, the plaintiff alleged, among other things, that the defendant made material representations concerning the quality of the mortgage loans underlying the securitizations, and breached warranties in the contracts concerning the quality of those loans. For example, the plaintiff alleged that the defendant had abandoned its underwriting guidelines by knowingly lending to borrowers who could not afford to repay the loans...Similarly, the plaintiff alleged that the defendants had provided false or inflated ratings for the proposed pools of mortgage loans...and the plaintiff also alleged that one defendant had made misleading statements in its Form 10-K and prospectuses. Thus, as in First Bank, these alleged misrepresentations constituted matters of fact outside the actual language of the parties' contracts. As a result, the relevant misrepresentations became evident only upon looking to matters lying outside the terms of the contract, and thus went beyond mere contractual misrepresentations.

In sum, there is a difference between cases in which appellate courts have upheld fraud claims, on the one hand, and cases in which courts have dismissed claims as duplicative of a breach of contract claim, on the other. Specifically, in cases when we have sustained a fraud claim on a motion to dismiss in addition to the breach of contract claim, the fraud claim has been based upon facts outside the contract terms.

Here, as noted above, the fraudulent inducement claim arises from, and is directly related to, section 3.15(c)(v) of the SPA, which governs representations and warranties. Indeed, Wyle alleges no more and no less that ITT breached its contractual duties as set forth in the representations and warranties of the SPA by failing to disclose the pre-award audit. This allegation does not state any noncontractual misrepresentation; rather, the misrepresentation made under the relevant contract provision also forms the basis for the breach of contract claim[.]

The majority countered that:

The underlying facts of this case are adequately set forth in the dissent and need not be repeated here.  Moreover, we have little disagreement with our dissenting colleague's review of the two lines of cases addressing the issue of whether a fraudulent inducement claim alleged in a complaint is duplicative of a breach of contract claim.  Where we differ is in the application of those precedents to the facts before us.

Explicated its own legal context:

It is axiomatic that in order to state a claim for fraudulent inducement, "there must be a knowing misrepresentation of material present fact, which is intended to deceive another party and induce that party to act on it, resulting in injury"...In the context of a contract case, the pleadings must allege misrepresentations of present fact, not merely misrepresentations of future intent to perform under the contract, in order to present a viable claim that is not duplicative of a breach of contract claim...Moreover, these misrepresentations of present fact must be "collateral to the contract and [must have] induced the allegedly defrauded party to enter into the contract"...Therefore, "[a]s a general rule, to recover damages for tort in a contract matter, it is necessary that the plaintiff plead and prove a breach of duty distinct from, or in addition to, the breach of contract"[.]

Here, defendants on appeal concede that the intentional failure to disclose an ongoing audit is a misrepresentation as to a present fact. They argue, however, that, since the nondisclosure is a breach of a contractual warranty contained in a specific provision of the contract itself, the misrepresentation is not collateral to the contract, thus making plaintiff's fraudulent inducement claim duplicative of its breach of contract claim. Plaintiffs, on the other hand, contend that misrepresentation of a contractual warranty may form the basis of a separate fraudulent inducement claim, particularly where, as here, the misrepresentation concerns the core value of a business or asset in the contract. Both parties cite precedent in support of their positions. Therefore we must, as did the dissent, examine the two lines of cases cited to determine where this case falls.

And took issue with the dissent:

We agree with the dissent that in order to sustain the fraud cause of action, there must be a breach of a duty separate from or in addition to the contract duty (see e.g. J.E. Morgan Knitting Mills v Reeves Bros. 243 AD2d 422 [1st Dept 1997]). Unlike the dissent, however, we find the cases cited by defendants turn on facts that distinguish them from the present case.

For example, in ESBE Holdings, Inc. v Vanquish Acquisition Partners, LLC (50 AD3d 397 [1st Dept 2008]), we held that the fraud causes of action were duplicative of the contract causes of action because they arose from the written provisions of the several agreements entered into by the parties...Significantly, however, we also found that the misrepresentations were not extraneous to those agreements because "none of the misrepresentations caused the actual investment losses"...Here, the failure to disclose the General Services Administration audit as required by the contract directly resulted in the losses claimed. As discussed in further detail herein, a fraud claim can be based on a breach of contractual warranties notwithstanding the existence of a breach of contract claim (Jo Ann Homes at Bellmore v Dworetz, 25 NY2d 112, 120-121 [1969]).

Similarly, in RGH Liquidating Trust v Deloitte & Touche LLP (47 AD3d 516 [1st Dept 2008], lv dismissed 11 NY3d 804 [2008]), we found that the fraud claims were duplicative of the breach of contract claim because they were based on alleged fraudulent misrepresentations related to the defendants' obligation under the agreement to conduct audits of financial statement with reasonable care. However, this is not the factual case before us. The representation in RGH involved future performance, i.e., the duty to conduct reliable audits, which was, we found, "in essence a claim of professional malpractice"...The misrepresentation was thus not one of present fact, as we concededly have in this case, but one of future intent, and the cause of action for fraud in RGH was thus properly dismissed.

The second line of cases on this issue hews closer to the facts before us.

In First Bank of Ams. v Motor Car Funding (257 AD2d 287 [1st Dept 1999]), the plaintiff bought used car loans from defendant Motor Car Funding (MCF). The agreement contained warranties that the loans would comply with certain underwriting guidelines. MCF allegedly misrepresented the quality of the loans, inducing First Bank to purchase less valuable loans, which ultimately resulted in losses to the plaintiff. We sustained the fraud claim, finding that the allegations that the defendants misrepresented certain facts about the loans "cannot be characterized merely as an insincere promise of future performance."...We went on to hold that "a cause of action for fraud may be maintained where a plaintiff pleads a breach of duty separate from, or in addition to, a breach of the contract.  (Non-Linear Trading Co. v Braddis Assocs., 243 AD2d 107, 118). For example, if a plaintiff alleges that it was induced to enter into a transaction because a defendant misrepresented material facts, the plaintiff has stated a claim for fraud even though the same circumstance also give rise to the plaintiff's breach of contract claim. . . Unlike a misrepresentation of future intent to perform, a misrepresentation of present facts is collateral to the contract (though it may have induced the plaintiff to sign the contract) and therefore involves a separate breach of duty (Deerfield Communications Corp. v Chesebrough-Ponds, Inc., 68 NY2d 954, 956 [1986]...Nor is the fraud claim rendered redundant by the fact that these alleged misrepresentations breached the warranties made by MCF in the Agreement...The core of plaintiff's claim is that defendants intentionally misrepresented material facts about various individual loans so that they would appear to satisfy these warranties...This is fraud, not breach of contract.  A warranty is not a promise of performance, but a statement of present fact. Accordingly, a fraud claim can be based on a breach of contractual warranties notwithstanding the existence of a breach of contract claim (see Jo Ann Homes at Bellmore v Dworetz, 25 NY2d 112, 120-121)" [.]

Similarly, in another case involving false representations involving present contract warranties as to the quality of certain loans which were relied on by an insurer of those loans in its decision to insure those loans, we held that "[a] fraud claim will be upheld when a plaintiff alleges that it was induced to enter into a transaction because a defendant misrepresented material facts, even though the same circumstances also give rise to the plaintiff's breach of contract claim" (MBIA Ins. Corp. v Countrywide Home Loans, Inc., 87 AD3d 287, 293 [1st Dept 2011], citing First Bank). In reaching our conclusion, we noted that the allegations in the complaint must, on a CPLR 3211 motion (like the one presently before us), be accepted as true. That being the case, we went on to hold that "[b]ecause MBIA alleges misrepresentations of present facts, and not future intent, made with the intent to induce MBIA to insure the securitizations, the fraud claim survives. It is of no consequence that some of the allegedly false representations are also contained in the agreements as warranties and form a basis of the breach of contract claim"...Such a rule makes sense, for, as we noted in MBIA,  "It simply cannot be the case that any statement, no matter how false or fraudulent or pivotal, may be absolved of its tortious impact simply by incorporating it verbatim into the language of a contract"[.]

Although the dissent contends that the false representations in First Bank and MBIA were separate from the warranties contained in the contract, those representations were in fact warranted to be accurate at the time the contract was entered into and made for the purposes of inducing the plaintiffs to purchase those loans. They were designed to be relied on to arrive at an accurate value of the loans, and the value of the company being purchased here. These misrepresentations did not merely evince "an insincere promise of future performance [but were] instead...misrepresentation[s] of then present facts that were collateral to the contract, and thus plaintiff sufficiently alleged a cause of action sounding in fraud"...To hold otherwise would be a far too restrictive application of our precedents.

And, in turn, the dissent took issue with the majority:

The majority notes that the allegedly false representations in this case were warranted to be accurate when the parties entered into the contract, and that EDO made the representations for the purpose of inducing Wyle to purchase the loans. Thus, the majority concludes, EDO made "misrepresentation[s] of then present fact that were collateral to the contract," thus sufficiently stating a cause of action sounding in fraud.

The majority's argument, however, misses the mark: the majority's characterization elides the fact that the contract language itself contains a specific reference to the disclosure schedule, which supposedly listed every government contract or bid under audit. The fraud claim rests upon Wyle's assertion that despite the clause in the SPA specifically stating otherwise, EDO knew that one of the contracts was, in fact, under audit. Thus, the alleged misrepresentation was specifically addressed by one of the contract terms, and the complaint contains no allegation that EDO made any misrepresentations other than the one specifically referring to the clause in the SPA. This situation therefore presents a claim for breach of contract, not fraud.

Our holding in First Bank does not contradict this position. In that case, the warranties in the purchase and sale agreement stated that certain loans to be offered to the plaintiff would comply with certain underwriting guidelines. The fraudulent representations in First Bank involved subject matter — namely, quality of collateral, credit history, and amount of down payments — extraneous to the contract warranties themselves...Although we held that the alleged misrepresentations breached the general underwriting warranty in the underlying agreement, the alleged misrepresentations in First Bank also concerned matters that related to the individual loans but that were not specifically addressed in the general warranty...The facts in First Bank are therefore unlike the ones presented in the present case, where Wyle does not allege any misrepresentation other than the statement that the contracts were not under audit, and as noted above, the matter of audits was specifically and wholly contemplated by the SPA.

Thus, under the line of cases discussed above — namely, the line of cases beginning with J.E. Morgan Knitting Mills — I would hold that the motion court should have dismissed Wyle's fraud claim as duplicative of the breach of contract claim.

What is more, the measure damages Wyle is seeking here — namely, the difference between the price it paid and the price that it would have paid had ITT disclosed the OIG audit — is the same for both the fraud and breach of contract claims. This fact also supports the conclusion that the fraud claim merely duplicates the breach of contract claim[.]

There is also no merit to Wyle's assertion that because it seeks punitive damages on the fraud claim, that claim seeks damages different from those in the breach of contract claim. Indeed, it would make little sense to hold that merely asking for punitives necessarily creates a meaningful difference between a contract claim and a fraud claim; otherwise, a party could sustain a fraud claim merely by tacking on a request for punitive damages.

Lesson learned:  It may be hard to avoid vertigo when deciding which line of cases (J.E. Morgan Knitting and its progeny or First Bank and its acolytes) applies to an undisputed state of facts.  [Next stop:  Albany?]

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    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 you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    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.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    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.

    By clicking Register you state you have read and agree to our Terms and Conditions