Electronic Contract in UK Law

Such ‘relational’ contracts involve trust and confidence but of a different kind from that involved in fiduciary relationships. The trust is not in the loyal subordination by one party of its own interests to those of another. It is trust that the other party will act with integrity and in a spirit of cooperation. The legitimate expectations which the law should protect in relationships of this kind are embodied in the normative standard of good faith.

For example, in Bristol Groundschool Ltd v Intelligent Data Capture Ltd [2014] EWHC 2145 (Ch) the parties agreed to collaborate to produce training manuals for pilots. But Mr Richard Spearman QC, sitting as a deputy High Court judge, characterised the joint venture agreement as a relational contract and held that there was an implied term of the contract requiring good faith in its performance.

In Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50, para 288, in the Federal Court of Australia, Allsop CJ summarised the usual content of the obligation of good faith as an obligation to act honestly and with fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.

As OBG v Allan makes clear, the essence of conversion is a wrongful interference with the possession of tangible property. For these purposes the common law draws a sharp distinction between tangible and intangible property. Even in the case of the conversion of valuable documents (cheques etc.), to which several of their Lordships referred, there is an unlawful interference with a physical object to which a commercial value can be attached.

Although information may give rise to intellectual property rights, such as database right and copyright, the law has been reluctant to treat information itself as property. When information is created and recorded there are sharp distinctions between the information itself, the physical medium on which the information is recorded and the rights to which the information gives rise. Whilst the physical medium and the rights are treated as property, the information itself has never been.

Subsequent to the Holland case was In the Matter of Mumtaz Properties Ltd [2011] EWCA Civ 610. In that case Arden LJ (with whom Aikens and Patten LJJ agreed) said that the first step in approaching the question of whether a person is a de facto director is to examine the governance structure of the company. That case concerned a family company which was:

The fact that a person is consulted about directorial decisions or his approval does not in general make him a director because he is not making the decision.