Upon termination or expiry of this Agreement, each party shall promptly return to the other party or destroy all Confidential Information of the other party in its possession or control. Each party shall provide written confirmation of the return or destruction of such Confidential Information upon request of the other party. Notwithstanding the foregoing, each party may retain copies of the other party’s Confidential Information as required by applicable law or regulation. Any such retained Confidential Information shall remain subject to the confidentiality obligations in this Agreement."
Here is a plain English explanation of the Return or Destruction of Confidential Information clause:
- When the Agreement ends, both parties must return or destroy any Confidential Information they have from the other party.
- They must do this promptly after the Agreement terminates or expires.
- If asked, they must confirm in writing that the information has been returned or destroyed.
- However, they can keep copies of Confidential Information if laws or regulations require them to.
- Any Confidential Information they keep must stay confidential as per the Agreement.
- The purpose is to prevent unauthorized use of sensitive information once the Agreement is over.
- It requires proper handling of Confidential Information when the business relationship ends.
- This helps protect trade secrets and proprietary information.
- Overall, the clause balances confidentiality obligations with legal recordkeeping needs.
The obligation to return or destroy confidential information upon termination of an agreement has its roots in common law duties of confidentiality.
In the 19th century, courts determined that any confidential knowledge gained in a relationship should not be used once the relationship ends. This prevented misuse of sensitive information.
By the 1930s, non-disclosure agreements began explicitly requiring return of confidential materials when the contract expires. However, parties often failed to implement this contractual obligation. Later court cases enforced return and destruction terms, underscoring their legal validity.
In the 1970s and 1980s, technology revolutionized information sharing. Photocopiers and computers made data duplication easy. Contract drafters recognized heightened confidentiality risks post-termination. Strict return and destruction clauses became standard to mandate data deletion.
The Uniform Trade Secrets Act in 1979 codified that principals must return an agent's trade secrets at the end of an agency. This demonstrated the clause's reasonableness in multiple contexts. During the 1990s tech boom, these clauses proliferated in IT, licensing, and employment contracts.
Today, mandatory return or destruction of confidential information upon agreement termination remains essential. It limits future liability and misuse of retained data.
As information security further evolves, these contract clauses will continue balancing business needs and confidentiality duties after relationships end.