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. The claimant provided the content for the manuals and the defendant converted the content into an electronic application, which the parties jointly published and marketed. One issue was whether the secret download was a breach of contract. There was no express term of the contract which prohibited it.

In my judgment those passages summarise the principle of misnomer as it has been generally applied in the earlier decisions set out above. First there must be a clear mistake on the face of the instrument when the document is read by reference to its background or context. In Nittan there was a clear mistake by the insurers in putting Sargrove Electronic Controls Limited instead of Sargrove Automation — a dormant company instead of the company which actually carried on the business.

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.

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.

An electronic database consists of structured information. 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.

It is clear from this case, as Mr Croxford said, that the law recognises indirect restraints of trade where the restraint derives from the loss of a benefit rather than a direct prohibition on competing trade. It is important to note, however, that Marshall does not suggest that any provision which leads to the forfeiture of a benefit if the employee leaves the relevant employment is a restraint of trade.