Contract Drafting_Seminar 3

Confidentiality clauses


Outlines:
- Looking back: let’s look at some recitals
- Confidentiality clauses
- Let’s practice: review of a non-disclosure agreement
- Role of the legal adviser in drafting
- Assignment
- Narrated slides:
- Best Efforts/Reasonable Efforts + Professional standards


Why do we need a confidentiality clause?
- Confidentiality clause is there to protect the information when the parties do not want to rely
only on the laws protecting professional secrets or industrial secrets (or ensure that the
coverage is extended to all information they want to protect)
- Is to protect information when the parties do not want to rely on the laws protecting
professional secrets or industrial secrets.
- To make the things clear and be on the same page and make sure that they both have talked
about it and included it in the contract.
- For the purpose of having more reliable evidence in case of dispute, statutory rules are
sometimes not enough.


What do the parties usually want to achieve by a confidentiality clause?
- Keeping the agreement confidential;
- Keeping the information that the parties wish to disclose to each other confidential
- Agreement on the statements about the fact that the parties have entered into a contract or any
of the activities performed or information disclosed under it
- For the purpose of having more reliable evidence in case of dispute, statutory rules are
sometimes not enough.


What agreements do not usually need a confidentiality clause?
- Transportation agreement
- Rental agreement
- Consumers and sellers on simple products.


What agreements do usually need a confidentiality clause?


- Research contracts.
- M&A transactions, Merge and Acquisition.

1

, Confidentiality clauses


- Consultancy agreements establishes the rights and obligations between you and the
consultant. It will outline the obligations and expectations of both parties. Moreover, this acts
to minimize the potential and risk of disputes in the future.
- Joint venture is a contract between two parties (usually companies) to pool resources in an
undertaking or venture that usually outlines a specific goal or timeframe. Companies often
partner to start projects that are in their mutual interest.
- Cooperation agreements.


Let’s look at the elements:
- Subject matter:
1- What do the parties exactly want to be kept secret?
2- The facts during the negotiation or the contract or the sources? Be exact with identifying
that.


- Exceptions must be also thought about in relation to people and information.
1- Information:
 Information in public domain
 Information already in possession
 Information disclosed by a third party
2- People:
 Staff, should the staff be able to know that? and imagine YES, they can know, how
they are supposed to be bound by the confidentiality clause just like you as a
contractor? The best way is to include confidentiality clause in regard to the staff in
the contract.
 Subsidiaries and related companies, should the subsidiaries be able to know about
that confidential information? It depends on the degree of the sensitivity of that
secret information and whether you really want to keep it between both of you and
with the subsidiaries?
 Agents, also depending on how important the information are.
 Public authorities, the information is usually given to them and usually there is
always a clause included that in case that confidential information is required by the
public authority to be disclosed that would be an exception.


- Extension of the obligation of confidentiality:
 Are the persons with whom the information is shared expected to keep it secret as
well?
 Should in this case this person also signs a confidentiality agreement?

2