M&A weekly update: 31 January–6 February

A recent case (Personnel Hygiene Services Ltd and others v Rentokil and others), decided by the Court of Appeal, considered whether a confidentiality agreement continued to apply after the conclusion of a further related agreement that contained no express obligation of confidentiality. No mention was made in the judgment of the presence of an entire agreement clause in the second agreement.

The court, upholding the first-instance decision, found the confidentiality obligation persisted, despite the conclusion of the second agreement. The court was not persuaded by an argument that the confidential information had only been provided to enable the recipient to decide whether to enter into the second agreement and therefore the obligation should not survive the conclusion of that subsequent agreement. The court also agreed, relying on the law of confidence, that the obligation should be extended to include information provided after conclusion of the second agreement, despite the lack of a provision to that effect in the first agreement.

Impact: the case will comfort those providing information to potential competitors that genuinely confidential information will be protected. The law of confidence was particularly useful in this case as the information provider had not included any provisions preventing the recipient from soliciting the provider’s customers, the details of which were confidential. The court was not convinced by the argument that in construing an obligation of confidentiality in this way it was akin to imposing an unenforceably wide restrictive covenant on the recipient. The court was also clear that the fact that some of the customer information was publicly available (e.g. names and addresses) did not mean that the non-public part of the information lost its protection…

Click on the link below to read the rest of the Macfarlanes briefing. 

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