Secret Commissions in IT Contracts

IT contracts often necessitate a myriad of contractual arrangements extending beyond the two principal contracting parties, and usually involving third party facilitation. In Imageview Management Ltd v. Kelvin Jack, the Court of Appeal (of England and Wales) has unreservedly confirmed that such facilitation does constitute agency. The court also unequivocally emphasised both the importance and the fiduciary nature of the consequential obligations and duties of the agent to the principal. In particular, the agent’s receipt of a ‘secret benefit’ often falls short of a ‘bribe’ but may nevertheless constitute a breach of such obligations and duties. Moreover, it is often identified only retrospectively in the bitterness of the breakdown of the parties’ effective working arrangements. However, in determining the remedies applicable following a breach, the Court has evidenced only a slight preference for the twentieth century restitutional, rather than a Victorian penal, approach. That the penal approach remains in judicial contemplation necessitates careful management of contractual relationships. The paper concludes by recommending documented disclosure of, and the principal’s consent to, both patent and obscured benefits.