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,

1. Such information later becomes known to the public by no fault of the party who was privy to such information.
2. If it is required by law or the court to be disclosed.
3. If the receiving party was already privy to the information before the agreement.
4. If he gets such information from a third party having no obligation to the confidentiality information disclosed.
5. 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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