Information Protection
Confidentiality
Also: Confidentiality Clause, Confidentiality Obligation, Non-Disclosure, Confidentiality Provision · Confidentiality Clause, Confidentiality Obligation, Non-Disclosure, Confidentiality Provision, Confidential Information
A confidentiality provision requires one or both parties to keep specified information private and not share it with unauthorized third parties.
It defines what information is confidential, what the receiving party may and may not do with it, and how long the obligation lasts.
Lawyer Explanation
A confidentiality provision is a contractual obligation to protect specified information from unauthorized disclosure or use. It typically defines the scope of confidential information, the permitted uses of that information, the standard of care required to protect it, and the duration of the obligation.
Confidentiality provisions appear both as standalone agreements (NDAs) and as clauses within broader commercial agreements. The scope and enforceability of the obligation depend on the contract language, the nature of the information, and applicable law.
Confidentiality breaches are frequently carved out of limitation-of-liability provisions, meaning the breaching party may face significant exposure for an unauthorized disclosure.
What It Actually Does
A confidentiality provision answers: "What information are we sharing with each other, and what are the rules about how it can be used and who can see it?" For example, a company sharing its proprietary business processes with a vendor under a services agreement may include a confidentiality provision requiring the vendor to use that information only to perform the services and not to disclose it to third parties.
Why It Matters
Confidential information — including trade secrets, customer data, financial information, and proprietary processes — is often among a company's most valuable assets.
A confidentiality provision provides a contractual basis to protect that information and to seek remedies if it is improperly disclosed or used. Without adequate confidentiality protections, a party may have limited recourse if its sensitive information is shared with competitors or the public.
The confidentiality provision should be read alongside limitation-of-liability clauses, indemnification provisions, and data security obligations.
Example
A company shares its customer list and pricing strategy with a consultant under a services agreement. The agreement includes a confidentiality provision prohibiting the consultant from disclosing or using that information for any purpose other than performing the services.
After the engagement ends, the consultant shares the customer list with a competitor. The company may have a claim for breach of the confidentiality provision — and the breach may be carved out of any limitation-of-liability clause, exposing the consultant to significant damages.
Common Language You May See
"Each party agrees to maintain the confidentiality of the other party's Confidential Information and not to disclose such information to any third party without the prior written consent of the disclosing party."
"'Confidential Information' means any information disclosed by one party to the other that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure."
What Stewart Law Looks For
- How is "confidential information" defined?
- Does the definition require marking or designation, or does it cover all information that should reasonably be understood as confidential?
- What are the permitted uses of confidential information?
- What standard of care is required to protect confidential information?
- Who may the receiving party share confidential information with?
- What are the standard exclusions from the confidentiality obligation?
- How long does the confidentiality obligation last after the contract ends?
- Is the obligation mutual or one-sided?
- Is the confidentiality obligation carved out of the limitation-of-liability clause?
- What remedies are available for a breach?
- Does the clause address the return or destruction of confidential information upon termination?
Common Red Flags
A confidentiality provision deserves closer attention when it:
- defines confidential information so broadly that it covers publicly available information
- fails to include standard exclusions for publicly known information or independently developed information
- does not address the duration of the obligation after the contract ends
- is one-sided, protecting only one party's information
- fails to address permitted disclosures to employees and contractors
- is silent on remedies for breach, particularly whether injunctive relief is available
- does not address the return or destruction of confidential information upon termination
Perspectives
Customer / Buyer
The party disclosing confidential information will generally want a broad definition of confidential information, a high standard of care, a long survival period, and meaningful remedies — including injunctive relief — for any breach.
Vendor / Seller
The party receiving confidential information will generally want a clear and limited definition of what is confidential, standard exclusions, a reasonable standard of care, and a defined survival period.
Florida & Federal Considerations
Florida
Florida recognizes contractual confidentiality obligations and provides remedies for their breach, including injunctive relief and damages. Florida also has a trade secrets statute — the Florida Uniform Trade Secrets Act — that provides additional protections for qualifying trade secrets.
Florida courts have addressed confidentiality and non-disclosure obligations in a variety of commercial and employment contexts.
Related Terms
Contracts Where You'll Commonly See It
Frequently Asked Questions
What is the difference between a confidentiality clause and an NDA?
A confidentiality clause is a provision within a broader agreement — such as a services agreement or employment contract — that addresses the protection of confidential information. An NDA (non-disclosure agreement) is a standalone agreement dedicated entirely to confidentiality obligations.
Does a confidentiality obligation survive termination of the contract?
Many confidentiality provisions include a survival clause stating that the obligation continues for a specified period after the contract ends. Whether and for how long the obligation survives depends on the contract language.
What information is typically excluded from confidentiality obligations?
Common exclusions include information that is already publicly known, information that the receiving party already knew before disclosure, information independently developed by the receiving party, and information that must be disclosed by law or court order.
Can a party disclose confidential information to its employees and contractors?
Most confidentiality provisions allow disclosure to employees and contractors who need the information to perform under the contract, subject to obligations of confidentiality. The scope of permitted disclosure depends on the contract language.
What remedies are available for a breach of confidentiality?
Remedies may include injunctive relief, damages, and in some cases specific performance. Confidentiality breaches are often carved out of limitation-of-liability provisions, meaning the breaching party may face uncapped liability for a confidentiality breach.
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Contract language operates as part of the agreement as a whole.
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