Confidential Information Disclosure: Obligations & Terms for Third Parties

The Receiving Party may disclose the Confidential Information to any third party provided that: (a) the Receiving Party informs the third party that the information is confidential and subject to obligations of confidentiality on the same terms as set out in this Agreement; and (b) the third party has entered into a written agreement with the Receiving Party on terms no less onerous than and which do not grant more extensive rights than those contained in this Agreement.

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Explanation

This clause allows the Receiving Party to disclose the confidential information to other parties, as long as certain conditions are met:

- The Receiving Party can share the confidential information with any third party.

- Before disclosing, the Receiving Party must tell the third party that the information is confidential and subject to the same confidentiality obligations outlined in the agreement.

- The third party must sign a written confidentiality agreement with the Receiving Party containing terms that are at least as protective of the information as the terms in the original agreement.

In simple terms, the Receiving Party can pass the confidential information on to others, as long as those parties agree in writing to maintain confidentiality on the same terms.

This allows further disclosure while still binding third parties to the confidentiality obligations.

History of the clause (for the geeks)

The ability to disclose confidential information to third parties has long been a negotiated aspect of NDAs.

Early confidentiality agreements tended to strictly limit disclosure, often only between the two direct parties. But as business dealings grew more complex, the need to involve additional parties arose more often.

Rigid non-disclosure terms became impractical for consultations, joint ventures, corporate transactions, and other common business activities. So contractual language evolved to allow broader disclosure, provided protections remained in place. Permitting disclosure to "any third party" represented the most flexible approach, enabling the widest business use of the information.

However, unfettered disclosure carried risks. Thus conditions were added, requiring confidentiality obligations to extend to all subsequent recipients. This maintained control through contractual chains designed to prevent leakage. Over time, such conditional clearance became standard NDA practice to balance business needs with rigorous information security.

Today, permitted disclosees clauses allow parties to operate freely while still bound by confidentiality restrictions.

Multi-step recipient agreements work to extend protections as information travels. Contractual disclosure conditions enable prudent information sharing, crucial for productive business collaboration with minimized risks.