Term of Confidentiality
Contract Type:
Generic Contract
Jurisdiction:
Each party undertakes that it shall not at any time disclose to any person any confidential information concerning the business, affairs, customers, clients or suppliers of the other party, except as permitted by this clause. Each party may disclose the other party's confidential information: (a) to its employees, officers, representatives, subcontractors or advisers who need to know such information for the purposes of carrying out the party's obligations under the Agreement. Each party shall ensure that its employees, officers, representatives, subcontractors or advisers to whom it discloses the other party's confidential information comply with this clause; and (b) as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority. Neither party shall use the other party's confidential information for any purpose other than to perform its obligations under the Agreement.
Explanation
Here is a plain English explanation of the suggested confidentiality clause:
- It requires both parties to keep each other's confidential business information secret.
- Confidential information includes things like trade secrets, customer lists, and technical or financial data.
- The information cannot be shared with anyone else, except:
1) The party's own employees, agents, or contractors who need it to carry out the contract. These people must also keep it confidential.
2) When required by law or a governmental authority.
- The confidential information can only be used to fulfill obligations under this contract.
- It cannot be used for any other purpose without permission.
- The confidentiality obligations continue even after the contract ends.
In summary, this clause aims to protect sensitive business information the parties share during the course of the contract. It limits disclosure to specific circumstances so the information is not misused.
Confidentiality clauses arose long ago as merchants and craftsmen sought to protect proprietary methods and customer relationships.
Early English courts upheld contractual non-disclosure for sensitive trade secrets as reasonable restraints on commerce. But some jurists voiced concerns about confidentiality clauses hindering competition and industry growth.
By the 19th century, confidentiality provisions spread from trade secrets to cover business communications more broadly. Industrialization increased commercial focus on safeguarding competitive advantages in knowledge and techniques. Courts remained divided on confidentiality clauses‚ validity in restraining information sharing.
Standardized confidentiality clauses emerged in the 20th century as commerce relied more heavily on proprietary processes, customer data, and technical details. Corporate lawyers advocated using contracts to control private information. By mid-century, non-disclosure agreements were commonplace.
Today, confidentiality is widely considered crucial for protecting commercial interests and negotiating business relationships. But some critique overuse of blanket confidentiality clauses. Modern confidentiality provisions tend to define protected information more narrowly and permit necessary disclosures. Refined confidentiality drafting balances safeguarding private information and enabling fair competition.
In short, confidentiality clauses evolved from artisanal trade secret protections into a broader corporate tool for information control, finally maturing into more tailored modern forms.
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