The Receiving Party shall keep the Confidential Information confidential and shall not disclose any Confidential Information to any third party, except with the prior written consent of the Disclosing Party or in accordance with clauses [X] and [Y]. The Receiving Party shall not use any Confidential Information for any purpose other than the Purpose. The Receiving Party shall apply the same security measures and degree of care to the Confidential Information as it applies to its own confidential information. The Receiving Party shall ensure that any employee, agent or adviser to whom it discloses Confidential Information is made aware of and complies with the Receiving Party's obligations of confidentiality under this Agreement as if they were a party to it. The Receiving Party shall be responsible for any failure by such employee, agent or adviser to comply with such obligations."
This clause requires the Receiving Party to keep the Disclosing Party's confidential information secret.
In simple terms, the Receiving Party must:
- Keep the confidential information private and not disclose it to any third party without the Disclosing Party's written consent, except as allowed in other clauses.
- Only use the confidential information for the agreed purpose and not for anything else.
- Protect the confidential information to the same high standard as its own confidential information.
- Ensure any employees, agents or advisors who receive the confidential information are also required to keep it confidential like the Receiving Party. The Receiving Party is responsible if they fail to do so.
Overall, this confidentiality clause prevents the Receiving Party from disclosing or misusing confidential information provided by the Disclosing Party.
It requires the Receiving Party to restrict access and use of the information.
Confidentiality clauses emerged historically as a way to protect commercially valuable information and trade secrets.
Early trade guilds kept production methods confidential. With the rise of industry and technology, preserving proprietary knowledge became crucial.
English courts first protected confidentiality through the equitable doctrine of breach of confidence, requiring parties not to disclose information imparted in confidence. Later, express confidentiality clauses provided contractual protection for sensitive information.
At first, broad blanket clauses sought to protect all business information. But courts came to require reasonable limitations tailored to legitimately confidential material. This paved the way for carefully scoped confidentiality clauses tied to certain information disclosed for a purpose.
With increasing information exchange in commerce, confidentiality clauses allowed companies to share secrets with partners while contractually protecting them. Terms evolved from blanket prohibitions to more nuanced multi-layered duties imposed on recipients.
Today confidentiality clauses are a key feature of commercial contracts, covering sensitive technical data, customer information, and trade secrets.
They allow collaborations and partnerships while preventing harmful disclosure, balancing business interests. Reasonable confidentiality duties tailored to particular information are generally enforceable.