The Recipient shall use the Confidential Information solely for the purpose of evaluating potential business opportunities between the Parties (the "Purpose"). The Recipient shall not use the Confidential Information for any other purpose or disclose the Confidential Information to any third party without the prior written consent of the Discloser.
This clause limits how the Recipient can use the confidential information shared under the NDA:
- It defines the allowed "Purpose" - evaluating potential business opportunities between the Parties.
- The Recipient can only use the information for this defined Purpose.
- They cannot use the information for any other reason.
- The Recipient cannot share the information with third parties without written consent.
In simple terms, this restricts the use of the confidential information to assessing possible business collaborations between the Parties.
It prevents other uses or sharing without permission. This maintains control over the information.
Early confidentiality agreements placed few restrictions on the use of shared information. They focused more on obligating secrecy.
But this allowed recipients broad license in how they could leverage the information. As confidential data grew more sensitive and valuable, disclosers sought greater control over its utilization.
Purpose definition clauses emerged as a way to contractually limit usage to specific defined purposes. This gave disclosers legal power to prevent misuse while still enabling beneficial collaboration. At first, purpose statements were often vague, permitting uses related to assessing opportunities, dealings between parties, etc.
Over time, drafters learned to become more explicit in restricting purposes to prevent exploitation. Clearly delineating a sole permitted use curtailed alternate applications. Explicit prohibitions on wider uses and disclosures also strengthened protections. Highly specific purpose statements increased discloser control and tailored sharing to intended goals.
Today, precise purpose definition is a best practice in NDAs to guard information. Tightly constrained clauses allow disclosers to maintain direction over their confidential data. Well-crafted purpose restrictions empower beneficial, focused sharing while preventing recipient overreach.
They contractually reinforce that the information can only be used for purposes the discloser intends.