Précis – The case of Transport for Greater Manchester v Thales Transport & Security Ltd considered what documents a supplier was required to disclose under an audit clause.
The Court interpreted the audit clause broadly, and required the supplier to disclose documents that were commercially sensitive and/or confidential and those that revealed the supplier’s costs.
Audit clauses will need to be drafted tightly in order to limit the types of documents that are disclosable.
In granting an order for specific performance the High Court had to consider what documents a supplier was required to disclose under an audit clause contained in a services contract. Although the case was decided on its facts and involved construction of the particular clause, the approach of the Court will be of interest to those involved in drafting and negotiating contracts containing audit clauses. The Court interpreted the clause broadly, finding that the supplier was required to disclose wide categories of documents including those that were commercially sensitive and/or confidential and those that revealed the supplier’s costs. This case indicates that suppliers will need to draft any audit clause very tightly if you wish to limit the categories of document that may be disclosed.