Some people like to acknowledge that the potential consequences of breach of confidence are so severe that ordinary contractual damages might not be adequate and equitable relief might be the only means of protecting your position. Equitable relief is the tasty part of the commercial law: Injunctions, dawn raids, Anton Piller orders and so on. Whatever - ah - floats your boat[1].
Notionally, this is by way of excuse pre-loading to gain an acknowledgment so when the poor victim who goes to the courts of chancery seeking orders for a dawn raid, it can point to M’lud (or at the defendant) and say, “You see, your honour? That rascal knew perfectly well I might need an injunction here.”
It falls to us to consider when the situation might arise that damages are not an adequate remedy. Not all that often, in this old buzzard’s opinion.
Confidentiality agreements
The argument runs that it might be hard to prove that you’ve lost any money as a result of a confidentiality breach, so you want to be sure that equitable remedies like injunctions ordering the other guy to keep his mouth shut – those, under English law, that do not technically arise under the law of contract – are available to you.
In theory, this makes sense: one enters a confidentiality agreement to buy another man’s silence, whether or not there are gains or losses to be had from his doing so — but in practice, it is largely nonsense — who ever sought an injunction on a confi? The better question to ask, we think, is whycontractual damages are often an “inadequate” remedy/ Why? Because it is quite hard to prove loss through simple disclosure of confidential information. And why is it hard to prove that loss? Because, often, there won’t have been any.
Contractual damages generally compensate for actual loss, not to account for profits. If you can say you've suffered any loss from, say, disclosure of client lists, it will be consequential in nature, sufficiently speculative that courts are traditionally reluctant to award it, also presenting as it does uncomfortable questions as to causation: Was the reason you lost all that business to a competitor because your client list was disclosed, or because your product was inferior?
