Clause library

Confidentiality clause, explained

A confidentiality clause limits how each party can use and share the other's private information.

What does a confidentiality clause do?

A confidentiality clause protects information that one party shares with the other, such as pricing, customer lists, plans and technical details. It usually limits use of that information to the purpose of the contract and limits disclosure to people who need to know it. Common exceptions include information that is already public, was already known, or has to be disclosed by law. The clause often lasts beyond the end of the contract, for a set number of years or indefinitely for trade secrets. A standalone NDA does the same job before a contract exists.

Example wording

Example · our own drafting

Each party will keep the other's Confidential Information confidential, use it only to perform this agreement, and disclose it only to its employees and advisers who need to know it and are bound by equivalent duties. This clause does not apply to information that is or becomes public other than through a breach of this agreement. These obligations continue for [3] years after this agreement ends.

In Plain English

Each side keeps the other's private information secret, uses it only for this work, and shares it only with staff and advisers who need it and who are also bound to keep it secret. Information that becomes public in a fair way is not covered. The duty lasts for 3 years after the contract ends.

What do people negotiate in a confidentiality clause?

  • How broadly confidential information is defined.
  • Whether information has to be marked as confidential to be covered.
  • How long the obligations last after the contract ends.
  • Who it can be shared with, such as contractors or group companies.
  • What happens to the information when the contract ends: return or destruction.

Which contracts include it?

Lex includes this clause in, among others:

  • Mutual NDA
  • Independent contractor agreement
  • Consulting agreement
  • Offer letter

Draft a mutual NDA with this clause

Free for the other side

Lex drafts it in Plain English beside the legal wording. Share one link; both sides agree and sign.

Frequently asked questions

What does a confidentiality clause mean?

It means each party agrees to keep certain information private, use it only for the agreed purpose, and share it only with people who need it.

Is a confidentiality clause the same as an NDA?

They do the same job. An NDA is a separate agreement, often signed before talks start. A confidentiality clause sits inside a wider contract.

How long does a confidentiality clause last?

It depends on the wording. Many clauses last for a set period after the contract ends, commonly two to five years, and some last indefinitely for trade secrets.

Related