Cookie Jar June Veiled threat?

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1 View the online June 2012 Cookie Jar June 2012 The Cookie Jar is brought to you by Bristows' Technology, Media and Telecommunications Team. Every month we comment on issues affecting suppliers and users of TMT - changes in law, recent cases and market trends. The Team is led by Philip Westmacott and Mark Watts. The Cookie Jar is edited this month by David Horner. Veiled threat? Richard Swaine The corporate veil is one of the key principles in UK company law. It provides that each company is a different legal person from its shareholders and the liability of those shareholders in respect of the actions of the company is limited. A court decision which seeming undermined this principle would therefore cause some concern. At first glance it would appear that the recent decision of the Court of Appeal in Chandler v Cape plc is just that. In this case a parent company, Cape plc, was successfully sued by an employee of one of its subsidiaries who had contracted asbestosis. Whilst the court accepted that Cape plc was not responsible for the actual implementation of health and safety on the relevant site, the court established that Cape plc had superior knowledge of the asbestos business, and knew that the business was being carried on by its subsidiary in a way that risked the health and safety of others. The court felt able to establish that a duty of care existed between Cape plc and the employees who worked for its subsidiary and that Cape plc s failure in regard to that duty had lead to the injury to this particular employee. However, the court made clear that this approach was not intended to undermine the principle of the corporate veil i.e. Cape plc was not being held responsible for the failure of its subsidiary; it was being held responsible for its own failure to act responsibly. This case may lead to an increase in claims against parent companies where employees are able to establish that a duty of care has arisen in their favour. Parent companies may consider it prudent to ensure both that knowledge on particular risk factors is being shared with those responsible for health and safety throughout the corporate group and Forward to a colleague In this issue Veiled threat? ICO and Article 29 Working Party serve up recipes for cookies compliance EU Cookie Survey When might a side letter create legal relations? Ambushing is not an Olympic (or Paralympic) sport Bad news if you discover misconduct post-termination... About Us Philip Westmacott Partner Mark Watts Partner David Horner Associate Click HERE to find out about Bristows' TMT sector Click HERE to find out about Bristows' Information Technology practice

2 also that insurance policies are wide enough to cover this newly established duty of care. Click HERE to see previous issues of The Cookie Jar ICO and Article 29 Working Party serve up recipes for cookies compliance James Brunger As is now widely known, the European rules governing the use of cookies and similar technologies have been changed to require prior consent from users. To give businesses time to comply, the regulator responsible for enforcing these rules in the UK, the Information Commissioner s Office (ICO), declared a one year transitional period during which it would not take any formal enforcement action. That transitional period came to an end on 26 May Like us on Facebook Follow us on LinkedIn Follow us on Twitter Updated ICO Guidance To coincide with the end of the transitional period, the ICO has published updated guidance on how to comply with the new cookies rules. The most significant change is the introduction of a new Implied Consent section. This makes clear that, in some circumstances, consent can be implied from actions taken by the user, such as visiting a website, moving from one page to another or clicking a particular button. It is an essential ingredient of implied consent that the user understands what they are agreeing to and therefore clear and relevant information should be made readily available to the users before cookies are set. The new section marks a significant softening of the ICO s approach towards cookies. It had previously been feared that a more explicit opt -in, such as a tick box or acceptance button, might be required. However, while this clarification will come as a relief to website operators, the ICO continues to avoid providing example wording that should be used on a website to imply consent. A wide array of statements about the use of cookies can therefore be found across UK websites that have taken steps to comply. New Article 29 Guidance The influential European advisory group, known as the Article 29 Working Party, has also published guidance concerning the new cookies rules (in the form of Opinion 04/2012). However, rather than focussing on how consent is obtained, the guidance looks instead at which cookies actually require consent. While this is not the will implied consent be accepted around Europe? guidance that one might have hoped for, it does contain clarifications at a European level on the scope of the two exceptions to the requirement to obtain user consent prior to setting cookies. In particular, it explains that consent is not required for many functionality cookies, such as cookies used to remember the contents of a shopping cart, provided the website does not remember this information after the user has left the site (consent would need to be sought for more persistent cookies). It also confirms that first party cookies used to collect anonymous, aggregate website statistics are

3 unlikely to require consent, so long as information is provided in the website s privacy policy and safeguard measures such as an opt-out are implemented. The Article 29 s views closely match those expressed by the ICO. EU Cookie Survey Bristows, together with law firms across Europe, has produced a report outlining how the European cookie laws have been implemented in each EU Member State. Clients can obtain their free copy of this report by contacting Mark Watts, Hazel Grant or James Brunger. When might a side letter create legal relations? David Horner The case of Barbudev v Eurocom & Ors concerned a sale by Mr Barbudev of his stake in Eurocom and, in particular, a proposal that Mr Barbudev have an opportunity to make an investment in Eurocom at a subsequent date. The key document in this regard was a side letter which set out certain terms associated with Mr Barbudev s future investment in Eurocom. Overturning the decision of the High Court as regards the parties intentions, the Court of Appeal considered it was very clear from the terms of the side letter that the parties had intended to create legal relations. In reaching this conclusion the judge made reference to four specific factors: the side letter had been drafted by lawyers; the language of the side letter was suggestive of legal relations, for example, there was reference to consideration having been provided by the parties; the side letter made express reference to the Contracts (Rights of Third Parties) Act 1999 and the terms being governed by English law, indicating an intention to create legal relations; and the confidentiality provisions in the side letter were clearly intended to be contractually enforceable between the parties, whatever the status of other parts of the letter The Court of Appeal s decision on this point was ultimately a hollow victory for Mr Barbudev. Despite finding that the parties had intended to create legal relations, the Court of Appeal held the side letter was no more than an agreement to agree. The provisions in the side letter concerning Mr Barbudev s opportunity to invest were therefore an unenforceable agreement as between the parties. Parties involved in all manner of commercial arrangements frequently enter into a side letters as an adjunct to a main agreement or as a precursor to entering into comprehensive written terms. This case highlights the importance of making absolutely clear which, if any, provisions contained within side letters are intended by the parties to be legally binding.

4 Ambushing is not an Olympic (or Paralympic) sport Sacha Wilson In an attempt to combat ambush marketing during the Olympics and Paralympics, there are specific regulations in place which will restrict certain types of advertising in the vicinity of 25 specific Olympic and Paralympic event zones. Broadly speaking, the event zones are the immediate roads around the stadium or park where an event is to be held as well as the direct pedestrian route to the event from the nearest station. The restrictions will be in place from the day before an event or series starts until the end of the last day of the event in that location. During this time, authorisation from LOCOG (the London Organising Committee of the Olympic and Paralympic Games) will be required to advertise in the event zones. The regulations place an obligation on those who own or control the land within an event zone to ensure there is no unauthorised advertising. The regulations define what constitutes advertising broadly. Both traditional and new types of advertising will be restricted (e.g. billboards, flyers, give-aways, mobile and aerial advertising). The regulations even restrict the wearing of sandwich board advertisements and advertisements appearing on "an animal" or the human body! There is an exception for advertising within buildings. However this exception does not cover any train station partly within an event zone, and/or a stadium or other building in which an Olympic event is to be held. There is also an exception for established shop signs and advertising that has been in consistent use prior to the games, provided that no special promotional benefit from the games is obtained. The regulations are expected to be enforced strictly and the police will have immediate powers to stop and prevent unauthorised advertising and even to enter private land to do so. Bad news if you discover misconduct posttermination... Hannah Crowther The Court of Appeal has ruled in Cavenagh v William Evans Ltd that a clause allowing one party to terminate a contract by way of a payment in lieu of notice gives rise to a debt, which will be payable notwithstanding the subsequent discovery of a breach which would have entitled the debtor to treat the contract as repudiated.

5 This case concerned an employee who was dismissed from his employment with payment of six months wages in lieu of notice, expressly permitted by the terms of the employment contract (a PILON clause). Subsequently (but before the employer had paid the outstanding wages) it was discovered that the employee had committed gross misconduct which would have been grounds for summary dismissal. The company sought to rely on this gross misconduct as a defence for non-payment of the debt. The Court of Appeal held that, in choosing to exercise its contractual power to dismiss the employee, the company accrued a debt to him which it could not avoid by opting to rely on the common law route of subsequent acceptance of a repudiatory breach. The critical question in this case was whether the letter of dismissal would be read as an unequivocal decision by the company to terminate the employment under the PILON clause in the employment contract. The Court held that it was. As part of its reasoning, the Court considered that, in agreeing to a PILON clause, an employee surrenders valuable rights and confers a corresponding benefit on the employer. The party electing to terminate a contract under a PILON clause is choosing a clean break, taking the risk that it may subsequently discover matters which may have justified summary dismissal. It is clear that the principles in this decision could be applicable outside of the employment context, to many services agreements containing post-termination rights. This judgment makes it doubtful that a party terminating a contract could rely on a subsequently discovered breach to deny the other party any post-termination rights it has accrued. The information contained in this document is intended for general guidance only. If you would like further information on the above, or advice on any other TMT law issues, please do not hesitate to contact a member of our Technology, Media and Telecommunications team - philip.westmacott@bristows.com or mark.watts@bristows.com. Update my subscription preferences Forward to a colleague Unsubscribe 100 Victoria Embankment London EC4Y 0DH T +44 (0) , F +44 (0) info@bristows.com, Bristows, see Terms of Use