How do you manage records of discussions you have had in relation to contracts with suppliers, clients or other business partners?
A recent case involving a dispute about the “ownership” of emails of a company’s former employee shed some very interesting light on the risks of failing to have systems that keep a record of important discussions or documents relating to contracts.
The case (a UK case, but one that is likely to have a similar result in Australia) centered around a contractual dispute, in which one party had failed to meet 2 contractual milestones, triggering a liability to pay sums totaling $30 million.
There was evidence that the former CEO had agreed to a separate arrangement, and the company wanted access to these emails to prove that separate arrangement.
The former CEO had his company emails automatically forwarded to his personal email address, and unfortunately for the company, these emails were automatically deleted from the company’s servers when they were forwarded. The result was that the company was now reliant on these court proceedings to require the former CEO to hand over the emails so that they could prove their claim.
The UK court was therefore asked to decide on the narrow question of whether the company had any claim to ownership of the content of the CEO’s emails.
It found the company had no right to the content, denying it access to the CEO’s emails. Essentially the ruling means that a business may not own its employee’s emails if they are not held on their own servers.
Australian courts would probably have arrived at a similar conclusion, so it is extremely important to use this sort of case as a reminder that:
- emails and other documentation that relate to a contract should be located on your own servers
- these items should be stored in a pre-defined way together with the contract, so that if problems arise, the documents that might prove your case are accessible
- employees should never be allowed to send business emails out to personal email addresses – and you should ensure that your company policies address this issue
✓ Aspect Tip: Have a solid system in place that ensures communication relating to a contract is easily retrievable if you might need evidence of it in the future.
We provide specialist advisory services to organisations on ways to manage contracts and accompanying documents and correspondence. If you would like a free consultation in relation to your organisation, simply phone us on 02 8006 0830 or send us an email to [email protected]
If you want to learn more about contract management tips, and other easy to use tips and tricks on how to minimise risks and make contracts work for you, come and join us in our contract law series – aimed directly at managers, procurement officers, CFOs, sales people and anyone else involved in contracting. For more details, just send an email to [email protected] or visit our seminars page at Aspect Educate.