What is a confidentiality Clause?
A confidentially clause just like the word confidentially implies, is the section of a legal agreement that prohibits a party from disclosing important information such as trade secret that they might become privileged to in the course of the business to a third party without authorization.
A confidentiality clause can also be used interchangeable or in the stead of a non-disclosure Agreement (NDA).
The essence of this clause is to protect contracting parties from either revealing the information that they are privy to, sell or even give such information to a third party which might be detrimental to the party whose information is disclosed.
The effect of disclosing such confidential information to a third party is that it amounts to a breach of the agreement and a great recourse might be taken to address such breach. Such violation might cause the party great financial loss in which the disclosing party might be required to pay.
A party cannot be said to have breached a confidentiality agreement where,
- Such information later becomes known to the public by no fault of the party who was privy to such information.
- If it is required by law or the court to be disclosed.
- If the receiving party was already privy to the information before the agreement.
- If he gets such information from a third party having no obligation to the confidentiality information disclosed.
- If it was independently developed or acquired.
In conclusion, it is advisable to include a confidentiality clause when entering an agreement that might cause you to disclose your commercial secret to the other party. This is because it acts as a shield giving the other party prior notice of the duty of trust to hold such information he might come across either expressly or by omission in confidence.
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