The Recipient shall keep confidential and not disclose the Confidential Information to any person except with the prior written consent of the Discloser or in accordance with this clause. The Recipient may disclose the Confidential Information to: (a) its employees, directors, officers and professional advisers who need to know the Confidential Information to enable the Recipient to perform its obligations under this Agreement; and (b) as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority. The Recipient shall ensure that any person to whom it discloses Confidential Information under this clause complies with the obligations of confidentiality and non-disclosure contained in this clause as if that person were a party to this Agreement. The Recipient shall be liable for any failure by any person to whom it discloses Confidential Information to comply with the obligations of confidentiality and non-disclosure contained in this clause.
Here is a plain English explanation of the Need to Know confidentiality clause:
- The Recipient must keep the Confidential Information secret and not disclose it without the Discloser's written consent.
- The Recipient may share the Confidential Information only with its own employees, directors, officers, and professional advisors who need it to perform the Recipient's obligations under the Agreement.
- The Recipient may also disclose Confidential Information if required by law, a court, or a government/regulatory authority.
- The Recipient must ensure anyone it discloses the Confidential Information to complies with the same confidentiality obligations as if they were a party to the Agreement.
- The Recipient is liable if any person it discloses the Confidential Information to breaches confidentiality.
- The purpose is to tightly restrict Confidential Information sharing to only those who truly need to know it.
- It also ensures anyone gaining access upholds their duty of confidentiality.
Confidentiality clauses have long been a feature of English commercial contracts.
As early as the 18th century, agreements among merchants often contained provisions restricting disclosure of sensitive information. However, confidentiality clauses proliferated during the Industrial Revolution as trade secrets grew in importance.
English courts upheld the validity of confidentiality restrictions in the 19th century, granting injunctions against those who improperly revealed confidential information. The "need to know" principle emerged from English common law's strict limits on information sharing.
By the 20th century, explicit confidentiality clauses were standard practice in English contracts. They allowed for more complex specifications of what data was protected and who could access it. "Need to know" provisions became more refined as well.
Modern English contract law continues to enforce reasonable confidentiality clauses, balancing business interests in secret information with public policy values of transparency.
Today's confidentiality clauses derive from centuries of English commercial experience safeguarding proprietary knowledge and restricting its distribution on a need to know basis.