Non-disclosure agreements (NDAs) are a form of confidentiality agreement used to provide governing terms to protect confidential information. Commonly, an NDA is entered into by the parties involved at the beginning of a commercial transaction. However, it is possible to enter into a retrospective NDA so long as all parties agree. Retrospective NDAs occur when confidential information is shared prior to the signing of confidentiality obligations.

Almost all types of information can be classed as confidential and therefore be subject to a non-disclosure agreement. Whilst there is no specific legal definition of what constitutes confidential information, it is not possible to claim that information readily accessible to the public is confidential—therefore, restrictions cannot be placed on it.

An NDA should be entered into as quickly as possible and, ideally, before disclosing any confidential information within a commercial transaction. Entering into a written agreement is one of the most effective ways to protect confidential information, as contractual obligations are easier to enforce.

Whilst the implementation of an NDA can act as a deterrent against the release of confidential information, it cannot guarantee that the information will remain confidential. Should any confidential information be released, remedies are available—either as preventative measures or in the form of compensation.

If it comes to light that confidential information may be released or misused, an injunction can be sought to prevent this. However, injunctions offer limited value if the information has already been disclosed.

Another form of remedy available is damages. This provides the claimant with compensation for the breach, calculated by assessing what the released information would have been used for by the claimant and any potential loss of earnings resulting from the information not being used for its intended purpose.

For further advice and assistance, please contact our Commercial Solicitors on 01604 344512 / 01908 044759 or email info@franklins-sols.co.uk

Are Your Supplier Contracts Helping or Hindering Your Business?

As a business, do you truly understand how your supplier contracts impact your value and growth? Suppliers play a vital role in the smooth running of your operations—but how do you know when a supplier relationship stops adding value?

How often do you take the time to review supplier performance and value, or are you sticking with the same suppliers out of habit or convenience?

Key Questions to Maximise Supplier Value

When did you last conduct a supplier review?
Does your business still need their products or services? Do they align with your current and future needs? Start by preparing a full list of your current suppliers—you might be surprised by how long it is!

When did you last evaluate supplier performance?
Are they keeping you updated with industry developments, innovations, or offering the same outdated solutions? How do they handle queries or complaints? Compare them to others in the market.

Are you getting the best financial deal?
Are there payment review clauses, discounts, or clawback provisions you’re not using? When did you last discuss payment terms or renegotiate pricing?

Have you checked the legal compliance of your suppliers?
Are they still accredited and permitted to provide the goods or services you require?

What If You’re Not Getting Value for Money?

These are all questions you should be asking at least annually. If your review shows a supplier no longer serves your best interests, it’s time to act. Whether you’re considering contract termination or renegotiation, we can support you.

You might not have a replacement ready, or you may have missed an auto-renewal window. But with the right planning, you can take control and make your contracts work harder for your business.

How We Can Help

Our Business Services team can assist with supplier contract reviews, helping you improve relationships and boost long-term profits. With expert legal guidance, we’ll ensure your supplier contracts align with your business goals and remain a true asset.

For any matters relating to business law, contact our Business Services team on 01908 660966 or 01604 828282, or email business.services@franklins-sols.co.uk

What is indemnity?

In simple terms an indemnity is a form of contractual promise that seeks to provide for payment in the instance that a certain event or set of circumstances occur, which usually arises on a breach of contract. The purpose of an indemnity is to shift the risk of a potential breach on to the party providing the indemnity. These contractual promises will be outlined within the contract so it is clear as to when a breach will have occurred.

How does an indemnity work?

Indemnities work on a pound for pound basis and seek to provide the party subject to the breach with compensation in respect of the loss they have suffered. A key advantage of an indemnity is that it seeks to ensure repayment for the injured party in respect of those losses that may not ordinarily give rise to a claim in damages under a breach of warranty claim. Indemnities therefore provide an extra layer of protection. When considering indemnities in comparison to warranties, there is also no obligation imposed upon the injured party to mitigate their losses or to demonstrate that they have done so.

Another key advantage of an indemnity is that the limitation period for claiming for the loss incurred starts from the date on which the loss was actually suffered. Therefore, theoretically speaking, the limitation period is longer in comparison to the limitation period under a warranty claim which begins to run from the date of the breach itself. Although an indemnity appears to cover unlimited losses by its very nature, it is not the case that 100% of the total loss incurred will, in every circumstance, be recoverable. This is why the contractual wording is key to ensuring that as much as possible of the total loss incurred is recoverable. For example, ensuring that all legal costs incurred in bringing a breach of contract claim are recoverable under the indemnity clause. The clause itself will of course be interpreted in conjunction with the entire contract.

What should you do if you need more information about how an indemnity works?

Whether you are the party giving the indemnity or the receiver of this contractual promise it is key to ensure that you understand the mechanics of how an indemnity works. If you require legal assistance with regards to reviewing and understanding an indemnity clause that may be incorporated into a contract that you are a party to, or if you require us to draft an appropriate clause, then please do not hesitate to contact Christopher Buck, Associate Partner in our Commercial Services Department.

With two judgments recently delivered in the Supreme Court, it is important to consider the consequences for lawyers drafting or negotiating and advising on commercial contracts.

Drafting

The drafting of commercial contracts – especially in relation to clauses that would previously have been deemed penalties – will now be governed by the judgments in Cavendish and ParkingEye.

The judgments have established that where a deterrent is used, this will no longer equate to a penalty.

In Cavendish, a Share Purchase Agreement (“SPA”) was put in place regarding shares being sold by the defendant to the claimant. Should the defendant breach the non-competition covenant, the SPA provided for two outcomes. The first, is the defendant would no longer be entitled to receive outstanding payments of significant sums under the SPA. The second was the claimant could choose to exercise a right in purchasing the defendant’s remaining shares at a reduced figure.

Upon the defendant beginning work for the claimant’s competitor – and as such breaching the non-competition clause – it was up to the court to decide whether the two clauses and thus two outcomes, were penalties. The court held that the outcomes were primary obligations, as they were conditions of the contract and, as they did not impose a secondary obligation, they were upheld and enforceable.

ParkingEye used a deterrent. This was an £85.00 fine, which would be imposed on anyone overstaying the 2-hour time limit in the car park. Signs in the car park clearly displayed the 2-hour maximum free stay and that the fine would be imposed if anyone exceeded this limit. The court found the fine was a deterrent for people overstaying the limit in the car park. The court found however, that it was not a penalty clause.

Previously, it was established a clause may be found to be a penalty where a sum greater than a genuine pre-estimate of loss is demanded by the claimant.

The fine in ParkingEye was not found to be a penalty, as the land-owner of the car park had a legitimate interest in wanting a prompt turnover in their car park. This, on top of ParkingEye’s interest in making a profit, was enough to show it was a deterrent but did not equate to a penalty.

As such, the previous rule surrounding penalty clauses has been abolished and the recent judgments have determined a greater allowance for clauses, which intend to deter a party from doing something. A deterrence will not amount to a penalty, unless it requires a secondary obligation arising further to the breach.

The fine imposed in ParkingEye would be the primary obligation. Primary obligations are terms of the contract which are enforceable, even where they are a deterrent. A secondary obligation, which makes a further imposition, may be found to be a penalty. However, the court went on to state that even secondary obligations could be justified on wide grounds.

Express terms

The case between Marks & Spencer and BNP Paribas regarding overpaid rent was concluded in December 2015. The court had to decide whether there was an implied term in the lease between the parties, which would allow M&S to receive back an apportioned sum of rent that had been overpaid. M&S had paid rent in advance for a period that extended after the break date of the lease. Further to the break clause terminating the lease early, M&S looked to claim for the rent which was paid for the period after the break date.

The court unanimously held that no such implied term could be found and, as such, M&S’s appeal was to be dismissed. The judges’ reasoning was that a professionally drafted lease was entered into by the parties, which did not stipulate or imply the inclusion of the implied term. Therefore, to go against the law stipulating landlords retain any rent paid in advance, was not considered to be the appropriate way forward by the court. They found the inclusion of such a term would have required to be expressly included in the lease.

Moving forwards, it is important to consider this ruling and, as such, the implications of break clauses when drafting a lease. It is worth thinking about the payment dates for the rent and whether these coincide with the break clause to avoid such a problem. Similarly, it may be advisable to include a clause that expressly confirms the position of the parties upon the exercising of the break clause and any claim for overpaid rent.

The above cases show how two important areas of commercial law have been clarified. As such, the importance of clear drafting and the inclusion of the relevant express terms are paramount. This highlights the need to receive legal advice when negotiating and entering into commercial contracts. Please feel free to comment below with any questions, or contact me to discuss any contractual term issues you may have.