The Receiving Party shall treat any oral disclosures of Confidential Information by the Disclosing Party with the same degree of care as the Receiving Party accords to written disclosures of Confidential Information, and shall protect all such oral disclosures against unauthorized use and disclosure. The Receiving Party shall notify the Disclosing Party in writing within [X] business days of any oral disclosure of Confidential Information, including the names and job titles of the individuals to whom such oral disclosure was made.
This clause requires the Receiving Party to protect confidential information provided orally by the Disclosing Party to the same high standard as written information.
In simple terms, the Receiving Party must:
- Treat any confidential information disclosed verbally with the same level of care as written confidential information.
- Protect oral disclosures from unauthorized use or sharing.
- Notify the Disclosing Party in writing within [X] business days of any oral disclosure made, including who received it.
The purpose is to ensure oral confidential information receives equivalent protection to written information. The Receiving Party cannot treat oral disclosures as inferior and must actively protect them. Prompt notification creates a record of what oral information was shared.
Overall, this prevents the Receiving Party from exploiting a loophole where oral confidential information might be less protected.
It obligates the Receiving Party to apply robust confidentiality duties to verbal disclosures from the Disclosing Party.
The historical development of clauses governing oral disclosures of confidential information reflects the need to close potential loopholes as commerce evolved.
Early confidentiality clauses focused on written disclosures, which were predominant. But with increased business dealings, in-person meetings and verbal exchanges grew. Lacking explicit protections, spoken confidential information was vulnerable to unauthorized use.
Courts came to impose general equitable duties of non-disclosure on sensitive commercial conversations. But express contractual clauses emerged to provide clearer boundaries around oral disclosures.
At first, broad oral confidentiality clauses mirrored those for written information. But narrowly tailored provisions developed to bind recipients while permitting legitimate business discussions. Prompt notification duties created accountability.
As trade secrets and proprietary knowledge became increasingly important, companies sought to shield all forms of confidential sharing, oral or written. Clear oral confidentiality clauses allowed freer in-person exchanges while still contractually protecting verbal disclosures.
Today, carefully scoped clauses govern oral transfers of confidential data alongside written disclosures.
They uphold reasonable protections vital to commerce based on ideas shared in confidence, however transmitted.