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Deliberate Use of Data for Another Purpose Breached "Good Faith"

on Monday, 17 September 2018.

In the case of Health and Case Management Ltd v The Physiotherapy Network Ltd ("H" v "T"), the High Court has ruled on the meaning of a contract involving "good faith".

There have been an increased number of English court cases in recent years that relate to the interpretation of "good faith". This case adds to the body of case law and helps contracting parties understand what the term means.

Facts of the Case

H offered services to insurance companies by managing referrals to clinics. T had a network of clinics and practitioners. The parties entered into a contract where H would refer people to T's clinics, and T would report back on the treatment to H. In the contract, H agreed to act "in good faith" to T.

H later decided to create its own network of clinics. H asked T for a spreadsheet with information about T's clinics. H said that it needed this information to view the different treatments around the UK and build an internal search engine, to create more efficiency in searching for clinics. T provided the information as requested.

H later told T that it was setting up a new business, but this would not affect the referrals to T. However, H was aware that the new business would compete with T and H would subsequently no longer need T's clinics.

T claimed that H was in breach of contract, including the "good faith" clause.

Decision

The High Court agreed with T. H's reason for requesting the data was dishonest. H's intention was to use the data to set up a rival network. H had failed to observe reasonable commercial standards of fair dealing and to be faithful to the agreed purpose and act consistently with justified expectations of the parties.

Comment

The term "good faith" is increasingly used in English law, but there is no settled meaning. Sometimes, it has been interpreted as "playing fair", "coming clean" or "putting one's cards on the table". This case adds to the body of case law that not being open and obtaining data through deceptive means would breach good faith.


If you want advice on "good faith" or other terms used in your contract, please contact Paul Gershlick in our Commercial Contracts  team on 01923 919 320.

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