Standard of Care

Contract Type:

Each party shall exercise the same degree of care to prevent unauthorized use or disclosure of the Confidential Information as that party normally exercises to protect its own confidential information of a similar nature, but in no event less than a reasonable degree of care. Each party shall ensure that access to Confidential Information is strictly limited to those individuals who have a need to know such information in order to fulfill the purposes of this Agreement.


This clause specifies that:

1) Each party must exercise at least the same level of care, caution and diligence to prevent unauthorized use or disclosure of the confidential information shared under the agreement as they normally employ to protect their own similarly sensitive information. I.e. must treat the other party's information with the same degree of protection as their own.

2) However, the level of care used must never be less than what would generally be regarded as reasonable for information of that nature. I.e. a basic reasonable standard of protection and security is the minimum requirement, even if a party's own standard of care for their own information is lower.

3) Each party must also strictly limit access to shared confidential information only to those individuals who need to know it in order to achieve the aims and purposes of the agreement. I.e. access should be restricted and strictly controlled based on necessity, not granted openly or casually without cause.

4) In summary, this clause requires both parties to actively safeguard and manage shared confidential information responsibly by protecting it to at least a reasonable standard, restricting access only to those who need it for the agreement's purposes, and never affording it lower care than they would their own equivalent sensitive data. However, effectiveness remains limited by each party's security capabilities and judgment.

Key purposes and rationale for including standard of care clauses are:

1) Responsibility: Requiring a reasonable or equivalent standard of care and safeguards for shared information formally obligates both parties to take responsibility for appropriately protecting its confidentiality and security. Lackadaisical or careless attitudes are discouraged. Active diligence is motivated.

2) Trust: Stipulating minimum standards of protection and limited access aims to give both parties more comfort that disclosed confidential information should be afforded an appropriate level of care and management by the other party, building confidence in sharing sensitive data. However, reliance remains on interpretation and fulfillment of obligations.

3) Accountability: Formalizing duties of care and access restriction makes each party clearly accountable for meeting baseline responsibilities in this regard, enabling recourse if information is used or distributed due to material negligence or irresponsibility. Failures can be measured against defined expectations.

4) Discipline: Requiring reasonably vigorous protection of shared information motivates both parties to establish thorough and procedural information security disciplines to enable compliance and avoid breach. Maturity is incentivized, although still limited by capacity.

5) Equity: Obliging equivalent or reasonable levels of care for shared information as a party's own helps promote fair dealing by preventing substantially higher protection being afforded to internal information compared with what is shared under partnership or contract. Even-handedness is aimed for.

6) Control: Specifying minimum standards of care allows some control over how strictly shared information must be managed to be retained, despite relinquishing direct oversight or physical possession of data. A degree of assurance or influence is maintained, while still enabling use. Reliance is placed on compliance, however.  

History of the clause (for the geeks)

Early exchange between partners relied primarily on mutual understanding and trust in continuing discretion over sensitive information shared, even after relationships lapsed, with little need perceived for defined standards of care or expressly allocating responsibility over data protection between parties through written rules. However, as commerce expanded globally, familiarity gave way to more fleeting connections - yet secure exchange remained critical to opportunity even without close bonds. Continuity came to depend less on assumptions of natural care and more on cooperation to facilitate dealings despite distance through instilling basic duties around information management.

Into the 19th century, some contracts began stipulating loose expectations over equivalent protection and limited use of confidential information to provide initial safeguards where reliance on unstated good faith alone proved insufficient in more transient relationships. However, recognition remained that practical restraints find credibility and authority through meeting present needs together, not radical demands beyond reasonable scope of influence or indifferent to consequence. Equity followed understanding, not imposition through unequal claims. At best, these early terms represented difficulty of effective regulation through genuine responsibility, not suppositions of control impossible in reality .  

By the early 20th century, bespoke contracts commonly prohibited neglect or irresponsible treatment of information but still relied substantially on relationship itself to determine proper standards of care based on present dealings, not prescribed rules alone. Pragmatism prevailed: adequacy judged through circumstances more than arbitrary metrics, oversight securing discretion through partnership instead of divorced from context or events giving rise to need. Effectiveness followed where restraint met capability, recognizing shared limits shape duty, not entitlements alone. Responsiveness proved ally to stability, not obstacle.

Today, intensive controls mandate procedure yet continuity relies on enabling practical compliance - balancing strict demands with reasonable functionality and judgement to guide application fitting situation, achieving the possible. Rigid terms risk rendering oversight futile if imposed indifferent to capacity or events, concentrating authority through theoretical power not anchored in governance realities. At their best, these clauses aim for partnership through reciprocal discipline, aligning restraints to shared interests before controls by securing discretion through consent to unforeseen conditions when arise. They rely on users to determine prudent outcomes, moderating provision for common good. Prosperity follows where possibility for prudent choice remains despite mechanisms in place - openness finding through restraint. Responsibility looks to reciprocating values, not unilateral rule.

In the end, while regulations intensify, continuity finds in moderation - restraint proving purposeless without understanding to set demands in service of protection, not obscure consequence through impossible claims. Responsiveness proves vital to sustainability. Practical authority comes through enabling events, not divorcing governance from circumstance. Shared limits shape duty as much as rights; and opportunity comes where we choose to exercise influence with care for mutuality.

Accountability finds in becoming partner to conditions arising as much as decrees set, balancing control and consent to facilitate events - not impose unreasonable standards indifferent to cost. Compliance achieves by meeting discretionary needs together, reciprocating value - not radical power divested of reality. Security attains where openness remains despite mechanism; and prosperity follows fair cooperation, aligning interests before controls. Effectiveness looks to discipline through common good, not rule alone. In the end, restraint means care before direction; and continuity comes of choice for partnership over power.