The law of confidentiality preserves the secrecy in information.
There's more to the law of confidentiality than just confidentiality clauses. It's an area of law in its own right.
Where the main purpose of a contract is to preserve confidentiality, it’s usually referred to as an “NDA”, “NDA agreement”, “Non-Disclosure Agreement” or simply “Confidentiality Agreement”.
As with all contracts, it's less of matter of what they are called, and entirely a matter of the legal effect of the words used. Substance over form.
Clauses preserving confidentiality don't need to be in standalone, dedicated contracts. They can be a single clause in a larger contract, and often are.
One of the problems with long, detailed confidentiality clauses is that they are prone to being considered the entire agreement in respect of confidentiality - a code. If some sort of confidential information falls outside the definition or the provisions of the clause, chances are that the common law of confidentiality will be the only remaining recourse, defeating the purpose of having the clause in the first place.
They also require a detailed knowledge of the law of confidentiality to know where the gaps in protection are.
Most commercial contracts contain confidentiality clauses of one type or another, such as distribution and re-seller agreements, sponsorship agreements, commission agreements, to name a few.
Two types of Confidentiality Clause
In NDAs, generally speaking, there are two types of secrecy obligation that can be imposed:
- One-way Confidentiality: Communications, information and documents which may come into the possession of the recipient is considered confidential.
But the confidentiality provisions do not apply the other way around.
The duties owed by one party to the other are not mirrored towards the other party.
Anything that is told to the other party – whether considered to be confidential or not – is not likely to be protected.
- Mutual Confidentiality: Each party owes the other the same or similar duties to keep each other's confidential information secret.
There are many variations on these two themes. When read carefully, some confidentiality clauses said to be mutual, aren't mutual at all.
This one is.
Example: Confidentiality Clause
None of the parties shall disclose to any person or use for any purpose any confidential information of the other as a result of entering into this Agreement.
This restriction shall continue to apply after the expiration or termination of this agreement without limit of time. These obligations shall cease to apply to knowledge or information which may properly come into the public domain (through no fault of the party concerned) or is required by law to be disclosed upon production.
We talk about non-disclosure agreements - NDAs - over here.
Related: Boilerplate Clauses