There's been a lot of attention lately to websites getting subpoenas to hand over user information, and then potentially getting a gag order as well for the subpoena. I'm wondering (just for curiosity's sake) if a website (or any individual/company) can be legally required to either violate a contract or a ToS agreement.

For example, if a service's ToS agreed to use a certain level of encryption for passing around private data, could a court require that encryption be changed or lifted? Or could it only subpoena the encrypted data.

  • Do you have a particular jurisdiction in mind? – HDE 226868 Jul 12 '15 at 16:34
  • Tags on question edited as per meta post – jimsug Jul 16 '15 at 5:32

Yes. Contracts do not excuse a site from obeying the law, and the law requires sites to obey court orders. "It violates my contract with a third party" is not a valid reason to disobey a court, and disobeying a court order is contempt. On the other hand, contract law (at least in the U.S. and U.K.) says that contracts that violate the law or public policy are invalid, and so you could not win a breach of contract suit if the defendant could not legally comply with the contract.

Now, a contract might require the company to attempt all possible legal ways to get the court to revoke its order, or to avoid the order in the first place (for instance, if Google does no business in China, a U.S. court might not excuse them from a contract because they capitulated to the Chinese government). However, when push comes to shove, private contracts are lower priority than court orders.

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Many contracts I've read explicitly excuse parties from violating the terms (to the most limited degree possible) when compelled by law. Here is a sample from an NDA:

Nothing herein shall restrict Recipient’s right to disclose the Confidential Information where such disclosure is required by written order of a judicial, legislative, or administrative authority of competent jurisdiction, or is necessary to establish Recipient’s rights under this NDA; provided, however that, in each case, Recipient will, if reasonably practicable and not prohibited by law, first notify Owner of such need or requirement. Recipient will cooperate with Owner in limiting the scope of the proposed disclosure and take all reasonable steps to obtain further appropriate means of limiting the scope of the required disclosure of Owner’s Confidential Information, provided that Owner reimburses Recipient for all reasonable, documented costs associated with any such cooperation.

Which makes me wonder if, absent such a provision, a party to a contract could face the dilemma of either violating their contract or violating a judicial order. I.e., face the consequences of breach of contract or face the consequences of contempt of court. There must be some interesting case law on this....

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    Illegality is a defense to breach of contract, full stop (the legal system won't punish you for breach of contract if you had to in order to obey the law). – cpast Jul 12 '15 at 16:49
  • @cpast: So you're saying, in effect, that if a judge decides that there's a compelling external reason for some term of a contract to be broken then he simply declares that term illegal? E.g., in general it's not illegal to contract with another to protect a trade secret. But as soon as a judge decides that secret is protecting something the government legitimately wants then it is (in that case) "illegal," so neither party to the contract can claim the contract was breached in complying with the judicial order? – feetwet Jul 12 '15 at 17:12
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    Not quite. If a judge determines that to follow the contract would require violating the law the contract is void. If a judge determines that a company must produce some information, he really doesn't care about the existence of a contract ("it breaks a contract" isn't a valid argument against a subpoena). Once his order is issued, it violates both the law and public policy to disobey it, so the legal system will not punish someone for obeying the contract (contracts being subordinate to laws and public policy). – cpast Jul 12 '15 at 17:18
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    There are confidentiality exceptions to subpoena, but they're classes of relationships that the law recognizes as confidential independent of any contract (e.g. attorney-client, doctor-patient, journalist-source sometimes); two generic entities can't just create the right kind of relationship by agreement. – cpast Jul 12 '15 at 17:25

Contracts are made under the law.

Any term of a contract that seeks to limit or restrict the operation of any arm of government are illegal and unenforceable.

Specifically, a court order must be complied with; if a contract says otherwise then that term and possibly the whole contract are void.

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You are asking two different questions. First, a company must obey the laws of the country it is operating in. If these laws force it to break a contract with a customer, then the company has to break the contract with the customer. Since this can have negative consequences, companies will tend to put a clause into any contract with a customer that allows them to do this.

Second, what must companies do about customer secrets? They have to provide information about the customer that they hold in their hands. You'd have to examine the laws of each country individually, but I doubt a company can be forced to store anything other than certain metadata about their customers in any Western country.

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