Confidentiality
Also known as: Non-disclosure, NDA clause, Secrecy obligation
An obligation not to disclose or misuse information shared in confidence between the parties.
What it is
A confidentiality clause defines what information is considered confidential, who may see it, what they may do with it, and for how long that duty lasts. It typically covers technical, commercial, and personal information exchanged during the relationship, and carves out things that are already public, independently developed, or lawfully obtained from a third party. In many agreements the clause also sets out what must happen to the information when the contract ends: return it, delete it, or keep it under continuing protection.
Why it matters
Confidentiality is often the single most commercially important clause in a contract. A disclosure obligation that is too narrow can leak trade secrets, customer lists, pricing, or unreleased product details. One that is too broad can be unworkable in practice and hard to enforce. Courts generally look for a clear definition of what counts as confidential, a reasonable duration, and evidence that the receiving party actually knew the information was sensitive. Getting the scope right is what turns a polite request into a legal obligation.
Typical language
An example of how this clause often reads — illustrative only, not a template:
Each party may disclose Confidential Information to the other for the purpose of this Agreement. The receiving party shall (a) use the Confidential Information only for that purpose, (b) protect it with at least the same care it uses for its own confidential information of like importance, and (c) not disclose it to any third party without the disclosing party's prior written consent. This obligation shall survive termination of this Agreement for a period of three (3) years.
Common pitfalls
- No definition of what counts as "Confidential Information" — leaving it ambiguous whether verbal disclosures or metadata are covered.
- A duration so long (e.g. perpetual) that a court may refuse to enforce it, or so short that trade secrets become public before the clause expires.
- Missing carve-outs for information that becomes public through no fault of the receiver, or that is compelled by law.
- No obligation to return or destroy materials on termination, leaving sensitive copies in the wild.
- Confusing confidentiality with non-use: a party may be entitled to see information but not to use it for unrelated purposes.
Related clauses
Draft a contract with this clause
Open the drafting canvas with a starter prompt for confidentiality. You can edit every line before anything is saved.
This explainer is general information and is not legal advice.