How do Confidentiality and Breach of Confidence work in business?

Confidentiality helps businesses keep important things secret

But how does confidentiality and breach of confidence claims work? Our guide provides a useful overview.

Words by Dr Martin Douglas Hendry

Introduction

Confidentiality is essential in many business relationships. When a person or business receives confidential information, they have an obligation to keep it private.

A breach of confidence can lead to legal action and damages, and it can have serious consequences for both parties involved.

In this blog, we will discuss breaches of confidence claims and confidentiality in the UK. We will cover what constitutes a breach of confidence, breach of confidence claims, confidentiality agreements, remedies for breach of confidence, recent developments in breach of confidence law, and what you need to know as a business owner when it comes to this area of law.

Let’s begin!

What Constitutes a Breach of Confidence

A breach of confidence occurs when a person or entity discloses confidential information to a third party without the consent of the individual or business that provided the information.

Confidential information is information that is not generally known and is of a confidential nature.

Types of breaches of confidence can include accidental disclosures, unauthorised access, and unauthorised disclosure.

When determining a breach of confidence, the following factors are considered:

The nature of the information
The circumstances in which it was shared
The intentions of the person or entity who shared the information
The harm that may be caused by the disclosure

Marking something as “confidential” may not always be sufficient, and a clear understanding of the legal factors that give rise to confidentiality is important.

Breach of Confidence Claims

There are two types of breach of confidence claims: breach of contract and breach of equitable obligation.

Breach of contract claims are based on the terms of an agreement between the parties.

Breach of equitable obligation claims are based on the common law of equity, which requires parties to act fairly and honestly in their dealings with each other.

To succeed in a breach of confidence claim, the following elements must be present:

The information was confidential
The information was disclosed without consent
The disclosure was in breach of an obligation of confidence
The disclosure caused harm to the party who provided the information

Defences to a breach of confidence claim can include public interest, legitimate interests, or consent.

Confidentiality Agreements

A confidentiality agreement is a legally binding agreement that sets out the terms of the confidentiality obligations between the parties.

They are often used in employment contracts and business agreements to protect confidential information.

There are two types of confidentiality agreements: unilateral and bilateral.

Unilateral agreements are where one party agrees to keep the other party's information confidential.

Bilateral agreements are where both parties agree to keep each other's information confidential.

Key provisions of a confidentiality agreement can include:

The definition of confidential information
The obligations of the parties to keep the information confidential
The exclusions from confidentiality
The term of the agreement
The consequences of a breach of the agreement

Ultimately, confidentiality agreements are best tailored to their individual circumstances and material, as a proportionate approach to the limitations and specifications around access and use is often a better approach than simply applying a boilerplate approach which may be too onerous, or fail to restrict the signee in a critical way.

Remedies for Breach of Confidence

If a breach of confidence occurs, the following remedies may be available:

Injunctions: A court order to stop the disclosure of the confidential information, where it is likely that an unauthorised and damaging disclosure will occur.
Court orders: to offer up or destroy the confidential material.
Damages: Financial compensation for any harm caused by the disclosure of the confidential information.
Account of profits: The disgorgement of any profits made as a result of the disclosure of confidential information.

The best remedy for any given situation and its enforcement is best understood by specialists in this area of law – who will be able to accurately determine liabilities according to law.

Recent Developments in Breach of Confidence Law

In the UK, there have been several recent developments in breach of confidence law. In 2017, the Supreme Court handed down a decision that clarified the test for determining whether information is confidential.

The test requires the information to have the necessary quality of confidence, and the person who provided the information must have communicated it in circumstances importing an obligation of confidence.

In 2018, the EU General Data Protection Regulation (GDPR) came into force, which introduced new rules on the protection of personal data. The GDPR has implications for confidentiality agreements and breach of confidence claims, particularly where personal data is involved.

As such it is important to understand that many areas of applicable law can come into play when it comes to confidentiality, and as such, where information is to be held under a high degree of secrecy, that appropriate advice is taken to ensure that all parties are aware of the relevant legal obligations.

Conclusion

Confidentiality is essential in personal and business relationships, and a breach of confidence can have serious consequences. To protect confidential information, individuals and businesses should have a clear understanding of what constitutes a breach of confidence, the types of claims that can be brought, and the remedies that may be available.

Confidentiality agreements are an effective way to protect confidential information, and they should be carefully drafted to include key provisions that reflect the specific circumstances of the parties involved.

It is important to seek legal advice if you believe that confidential information has been disclosed without consent. Recent developments in breach of confidence law, including the Supreme Court decision and the GDPR, have significant implications for individuals and businesses.

Staying up to date with these developments is essential for protecting confidential information and avoiding legal disputes.

In conclusion, breach of confidence claims and confidentiality are important areas of UK law that individuals and businesses should be aware of. By understanding the legal framework and taking proactive steps to protect confidential information, parties can avoid disputes and ensure that their confidential information remains private.

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