Lecture Notes on Contract Law PDF

**[Lecture 28/11/2024]** Confidentiality Agreements and NDA's -- contract that establishes the obligation for both parties to keep the information that they have shared, confident - These can be signed before the main contract is settled, or can also be applies after the entry into force of...

**[Lecture 28/11/2024]** Confidentiality Agreements and NDA's -- contract that establishes the obligation for both parties to keep the information that they have shared, confident - These can be signed before the main contract is settled, or can also be applies after the entry into force of the main contract - This is usually because it is delicate/sensitive information or trade secrets - Basic problem of this sort of contract is the liability to be established against the party in breach of the promise of confidentiality -- it is often very difficult to produce evidence on who was responsible for the leak of information - This contract will be subject first of all to the law that the parties chose as per article 3 Rome 1 Regulation What happens if there is no agreement as to the law which governs the contract? - If it was a contract of sale, we would go to article 4, para 1, letter a -- habitual residence of the seller - But this is not a sale of good, it is an NDA Agency agreements - Specific EU law regulations -- 83/00 - Agency contract = contract whereby one of the parties, namely the agent, which is an **independent party**, is not a worker of the principle with his or her own resources. They act as an **intermediary** in business operations or transactions in order to negotiate or conclude such transactions on behalf of the principal - Therefore assumes no liability because actin on behalf of someone else - Agent is not the party from a contractual perspective, but acts on behalf of the principal... this rases legal issues: What if agent say to client they were not acting on behalf of principle at certain times? Need to know what law governs this Article 1, paragraph 2, letter g of Rome 1 regulation excludes -- question whether an agent is able to bind a principle in relation to a third party Therefore deciding the governing law is a question for national law -- Rome 1 gives us no tools to establish this E.g imagine that the principal, I am the principal and I am located here in Spain and I commercialize some types of cars and I\'m selling them in Minnesota. And I have an agent there who is acting on my behalf to enter into purchase agreements with US clients, okay? Does the agent, does my agent need to previously buy my cars to sell them to my US clients? - No, if the agent buys my products, we don't have an agency contract but just a sale of goods, the agent would then be a buyer, that is not what happens this contractual relationship Very general terms and obligations of the agent - To promote sales - Act in good faith -- i.e avoid competition against the principal - Follow reasonable instructions - Keeping information confidential Contracts can be established against these notions -- freedom of the parties Obligations of the principle - Have to pay the agreed remuneration - Deliver the necessary documents concerning the transactions the agent will conduct - Duty of help i.e must provide information concerning the characteristics of the products, guarantees of the products etc - If agreed, the principles has the freedom to refuse sales entered into by an agent Article 3 paragraph(para) 5 -- shown in this case, nuances established in the general freedom -- in order to indefinity lex contractus the first thing you need to check is whether the parties have selected a specific legal system as the one governing the contract - But this para establishes nuances concerning mandatory rules -- namely those that cannot be derogated from by agreement, despite the lex contractus - This is in cases where every relevant part of the contract points towards a legal system other than the one selected by the parties as the lex contractus [Ingerman case] Paragraph 21 of judgement -- assess' the purpose of article 17 -- reparation to commercial agent and its reasoning -- the court here says its mandatory to compensate them but how much is discretion of MS (calculation method) Under art 19 -- parties may not derogate from these articles at the detriment of the agent -- from this provision the court derives the mandatory nature of compensation scheme Para 23 says -- EU law makers wanted these laws within common market to be unfirom Para 24 -- court highlights freedom of establishment and undistorted competition as the treaty objective Para 25 says therefore it must be followed and cannot be derogated from by a choice of law clause, this is the summary of legal philosophy of the court -- contained in para 5 of article 3 these days -- agency services provided within the EU territory, therefore existence of the compensation right for the agent This decision was extremely controversial -- economic consequences are extremely serious, both parties freely reached a contract whereby compensation right was expressly excluded which is perfectly normal in other jurisdictions, and in spite of this -- court ruled unexpectedly, mandatory nature to the extent to displace choice in contracts [Distribution and franchise agreement ] - In case of distribution agreement -- distributor usually an independent company equipped with economic material human resources - What happens if no agreement on distribution contract concerning lex contractus -- what law should rule that agreement? Article 4 f Rome 1 Regulation -- habitual residence of the distributor (art 3 and 4 are most important rome 1 regulations) - Para 2-4 establishes nuances in this rule In franchise agreement - We have a contract where one of the parties grants the other party a right to offer to the public certain products or services using the business and technical know-how distinctive signs and other protected rights owned by the franchisor - Franchisee must usually pay a fee in favour of the franchisor which usually will be calculated according to the earnings gained through the exportation of thew franchised business -- some mandatory rules under Spanish law, there is a register royal degree 201/2010, once terminated they have no right to operate under trademarks or other signs corresponding to the franchisor - Issue because products cannot be sold if agreement terminated -- shows added value of IP rights -- important to agree in contracts what happens with stock in these kind of contracts - What happens with law applicable to these contracts? Same rationale as we have been discussing -- if Rome 1 regulation applicable then we can resort to general principles freedom of choice -- in absence of this -- law of habitual residence of the franchisee as per article above PODCAST SCRIPT: Did you know that a confidentiality agreement, or NDA, can be signed either before or after the main contract is finalized? It\'s a crucial part of many business transactions, and it\'s important to understand how these agreements work.   Right, and they\'re often used to protect sensitive information like trade secrets, especially when dealing with intellectual property.   Exactly. And on top of NDAs, we\'ll be talking about agency agreements, which are also crucial for businesses. We\'ll look at their key provisions, as well as how the famous Ingerman case impacted the way we understand EU law regarding agency agreements.   So, confidentiality agreements, or NDAs, are important to protect sensitive information, right?   Absolutely. They\'re used to ensure parties keep shared information confidential, whether it\'s trade secrets, customer lists, or any other sensitive data.   And they can be signed before or after the main contract is finalized?   Exactly! It depends on the specific arrangement. Sometimes, you need to agree on confidentiality before diving into the details of the main contract.   Yeah, makes sense. But what about enforcing those agreements? How do you prove a breach and pin down the source of the leak?   That\'s tricky. Often, it\'s difficult to pinpoint the actual source of the leak. It often requires detailed investigation, which can be quite challenging and sometimes expensive.   Hmm, ok. You mentioned the law governing these agreements. Which law applies if the parties don\'t specify?   That\'s where Rome I Regulation comes in. It\'s a key EU regulation in determining the applicable law for contracts, and it\'s used extensively in these scenarios.   Got it. So, the parties can choose the applicable law?   Yes, Article 3 of Rome I allows the parties to freely chose the governing law for the contract.   Let\'s move on to agency agreements. What are they all about?   Think of an intermediary - an agent acting on behalf of a principal. They aren\'t employees; they\'re independent contractors.   So, an agent isn\'t responsible for the actual transactions? They\'re just facilitators?   Exactly, they\'re not liable for the actions.   Hmm, ok. So, what about the agent saying they weren\'t acting on behalf of the principal at a specific time? How do you determine the governing law then?   That\'s a common scenario in agency agreements. You need to look at the specific details of the situation. Rome I Regulation again comes into play.   Right. Rome I Article 1, paragraph 2, letter g, excludes situations where the agent binds the principal to a third party.   That\'s interesting. So, in these cases, the governing law is determined by national law?   Yes, national laws would govern the agency agreement and the agent\'s actions.   And, what about dealing with those \'agency vs. sale\' situations? How does that work?   Well, if the agent is truly an agent, they don\'t need to buy the goods before selling them to the principal. They\'re just facilitating the sale, not taking ownership.   Makes sense. What are the general obligations of an agent? I guess confidentiality is important, right?   You got it. Confidentiality is key. Other obligations include promoting sales, acting in good faith, following instructions, keeping the principal informed, etc.   And what about the principal\'s obligations?   The principal needs to pay the agreed remuneration, provide necessary documents, and support the agent with product information and other resources.   So, the parties can freely choose the applicable law for an agency agreement?   Yes, but with a catch. There are also mandatory rules that might apply, like any other contract.   Mandatory rules? What are those?   Those are rules that can\'t be altered by the parties\' agreement. Article 3, paragraph 5 of Rome I covers this.   Interesting. But if the entire contract aligns with a different law, does it still apply?   It\'s a bit nuanced. Rome I says that those mandatory rules apply even if the entire contract seems to align with another law. It\'s about upholding those essential rules.   Okay, let\'s talk about the Ingerman case. What was that all about?   The Ingerman case centered around the EU\'s goal of creating a uniform compensation scheme for agents within the common market.   Got it. So, the court stepped in to ensure consistent compensation, overriding the agreement between the parties?   Exactly. It was controversial because it essentially overrode the parties\' agreement. It was all about ensuring free movement of services and fair competition within the EU.   Right, and freedom of establishment was an important aspect, too.   Yes, the court recognized the need for a level playing field within the common market, ensuring that agreements don\'t unfairly disadvantage agents in terms of compensation.   So, if parties try to exclude the compensation scheme in their contract, it won\'t be valid?   That\'s right. EU mandatory rules would override that exclusion. It\'s a key point to consider in agency agreements.   What about distribution and franchise agreements? They seem similar to agency agreements, right?   Yes, they involve independent parties. But, in distribution agreements, distributors are more independent with their own resources.   So, they\'re not just facilitating a sale; they have their own infrastructure?   Exactly! They\'re not just intermediaries; they\'re actively involved in selling the goods, sometimes managing their own inventory.   And if the parties don\'t specify the governing law, what applies?   Rome I Regulation, Article 4, says the law of the distributor\'s habitual residence applies.   Interesting. How does that differ from franchise agreements?   In franchise agreements, the franchisee gets the right to use the franchisor\'s business model, brand, and know-how.   So, it\'s more about operating under a specific brand with the franchisor\'s system, right?   Exactly! Franchisees pay fees based on their earnings, and there\'s often a set of mandatory rules guiding the relationship.   What about termination? I imagine that can be tricky when dealing with existing stock.   Right, termination can be complicated. Franchisees often have rights to continue operating under the brand, sometimes with special provisions on their existing stock.   And the governing law for franchise agreements? It follows the same principle, right?   Yes, it does. Rome I Regulation\'s choice of law rules based on the franchisee\'s habitual residence apply.   Great. Thanks for breaking down these important concepts! This really helped clarify the different types of agreements and their governing laws. It\'s essential to understand these legal frameworks, especially when dealing with international transactions.   Absolutely. It\'s key to be aware of the different types of agreements, their key provisions, and the applicable laws. It can save a lot of headaches down the line.