Confidentiality Clause

Confidentiality Clause Defined

Confidentiality clauses, also known as non-disclosure agreements, prevent the signing party from divulging sensitive information, personally identifiable information (PII), and trade secrets. These protections are for documents as well as verbal communications. Parties can negotiate the terms of the confidentiality clause according to scope and obligations as necessary.

This article also defines confidentiality clauses.

Confidentiality Explained

You can create one-sided or mutual confidentiality clauses. One-sided confidentiality clauses limit one party from disclosing any information about the other. In a mutual confidentiality clause, both parties must not reveal specific information about each other.

Here is another article that explains confidentiality clauses.

Purpose of a Confidentiality Clause

The purpose of a confidentiality clause is to protect a company from the disclosure of their trade secrets and sensitive information. For personal information to stay that way, there needs to be a confidentiality clause for documents and for email communications.

Regardless of the methods of communication, industry, or position, a confidentiality clause protects companies if they need to file a damages claim against someone who disclosed critical details to someone, whether they planned to exploit the information or not.

Confidentiality Clause Examples

Examples of confidentiality clauses include:

• Example 1: Preventing employees from talking to the press
• Example 2: Limiting the disclosure of on-site business practices
• Example 3: Stopping business partners from sharing IP rights
• Example 4: Agencies preventing models from divulging their strategies
• Example 5: Protecting a company when working with contractors

Confidentiality Clause Samples

Sample 1 – Employment Contract:

Confidential Information.

1. Employee shall not, during the term of this Agreement or at any time thereafter, make unauthorized use of, or divulge to any other person or entity Company's trade secrets, confidential or other information as is described in Article 4, Section B, without prior written permission from Company's President. This Confidentiality Covenant shall apply to, but shall not be limited to all information protected under the Georgia Trade Secrets Act of 1990, and, in addition thereto, to all information described in Section B of this Paragraph and the protections provided to the Company under this Agreement shall be in addition to and not in lieu of the protections afforded under said Act.
2. At all times during the term of this Agreement, and after its termination Employee shall take all reasonable precautions to protect the integrity of and shall refrain from any use or divulgence of Company's confidential information and trade secrets including, but not limited to: all files, tickler files, resource information, rolodex, records, documents, drawings, specifications, equipment, customer lists, supplier lists or information, product, supplier or customer catalogues, and similar items relating to the business of Company, or copies thereof, whether the originals or copies were prepared by Employee or otherwise came into Employee's possession.
3. The confidential information and trade secrets described above shall remain the exclusive property of Company and shall not be removed from the premises of Company under any circumstances whatsoever without the express prior written consent of Company.
4. If Employee breaches or threatens to breach this Article 4, Company shall be entitled to obtain injunctive relief containing such mandatory or prohibitory clauses as are necessary to prevent the continued breach of this covenant of confidentiality. Company shall also be entitled to any other remedies provided under this contract or at law. If Company elects to enforce this Paragraph through a court of law of appropriate jurisdiction, Employee shall be liable for payment of all court costs, attorney’s fees, and necessary expenditures, which Company incurs.

Reference:

Security Exchange Commission - Edgar Database, EX-10.6 3 ubi_ex10z6.htm EMPLOYMENT CONTRACT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1320729/000137647415000176/ubi_ex10z6.htm >.

Sample 2 – Sale and Purchase Agreement:

Confidentiality. From and after the Closing Date, for a period of three (3) years after the Closing Date, Seller agrees and agrees to cause the Selling Affiliate, to treat all confidential data, reports, records, processes, know-how and other information it has developed or has in its control or possession relating to the Business, whether or not marked as confidential or proprietary (the “Information”), as confidential and to not disclose, discuss or reveal such Information to a third party without the prior written consent of Purchaser, unless Seller or the Selling Affiliate are required by applicable Law or order of a Government Authority to disclose any such Information and Seller or Selling Affiliate have informed Purchaser of such requirement and given Purchaser a reasonable opportunity to contest such requirement or to seek a protective order or a stay of such disclosure order. Seller agrees to exercise all reasonable efforts to avoid the disclosure of such Information to any third party. The obligations in this Section 7.08 shall not apply to any portion of the Information:

(a) which is or becomes, through no act or failure on Seller’s or the Selling Affiliate’s part, published information known on a non-confidential basis; or

(b) which corresponds in substance to information hereafter furnished to Seller or the Selling Affiliate by others as a matter of right without restriction on disclosure; or

(c) which is independently developed by or on behalf of Seller or the Selling Affiliate, without knowledge of the Information.

Reference:

Security Exchange Commission - Edgar Database, EX-10.(I) 4 d230919dex10i.htm SALE AND PURCHASE AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/16040/000119312511324512/d230919dex10i.htm >.

Sample 3 – Master Sale Agreement:

Confidentiality. From and after the Closing Date, for a period of three (3) years after the Closing Date, Seller agrees and agrees to cause the Selling Affiliate, to treat all confidential data, reports, records, processes, know-how and other information it has developed or has in its control or possession relating to the Business, whether or not marked as confidential or proprietary (the “Information”), as confidential and to not disclose, discuss or reveal such Information to a third party without the prior written consent of Purchaser, unless Seller or the Selling Affiliate are required by applicable Law or order of a Government Authority to disclose any such Information and Seller or Selling Affiliate have informed Purchaser of such requirement and given Purchaser a reasonable opportunity to contest such requirement or to seek a protective order or a stay of such disclosure order. Seller agrees to exercise all reasonable efforts to avoid the disclosure of such Information to any third party. The obligations in this Section 7.08 shall not apply to any portion of the Information:

(a) which is or becomes, through no act or failure on Seller’s or the Selling Affiliate’s part, published information known on a non-confidential basis; or

(b) which corresponds in substance to information hereafter furnished to Seller or the Selling Affiliate by others as a matter of right without restriction on disclosure; or

(c) which is independently developed by or on behalf of Seller or the Selling Affiliate, without knowledge of the Information.

Reference:

Security Exchange Commission - Edgar Database, EX-10.33 5 dex1033.htm MASTER SALES AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1350415/000119312506131362/dex1033.htm >.

Common Contracts with Confidentiality Clauses

Common contracts with confidentiality clauses include:

• Employment agreements
• Purchase agreements
• Business associate agreements
• Client services agreements
• Letters of representation

Confidentiality Clause FAQs

Confidentiality clauses carry legal implications for employees and employers alike. Avoid making legal mistakes. Check out the confidentiality clause FAQs below to learn more.

Are confidentiality clauses enforceable?

Confidentiality clauses are enforceable as long as they meet the elements of a contract. Exceptions to a waiver may apply. For instance, companies can’t enforce confidentiality clauses to protect public policy violations from discovery.

What should be in a confidentiality clause?

Confidentiality clauses can be as long or as short as necessary. A confidentiality clause should contain the following elements at a minimum to be enforceable:

• An agreement is made
• The other party accepts the agreement
• Both parties exchange consideration

You should also have parties sign and date the agreement. Speak with employment lawyers to help you draft, negotiate, and execute the legal particulars of a confidentiality clause.