A confidentiality clause is generally included in most commercial agreements or as a standalone agreement in the form of a nondisclosure agreement (“NDA”). The main purpose of the inclusion of the confidentiality clause is to ensure that any confidential information which is shared between parties is kept confidential.
What to look out for in a confidentiality clause
The clause should be drafted in a way that reasonable efforts to prevent the disclosure of any information identified in the business relationship is to be kept confidential for either a number of years or even indefinitely after the termination of the business relationship.
It is advisable to draft the clause as broadly as possible, the more specific you get, the more problematic it can become and if drafted broader it will be more favourable to the party who needs to protect any confidential information.
A specific clause can, however, be helpful in shorter-term agreements where very specific items are to be protected.
When sharing confidential information, enforcing a clause to protect it means either or all parties to the agreement do not want the information to be shared and should include the barring of assigning the information to any third parties without preapproval.
The confidential agreement must be reasonable for it to be enforced. Courts look at several factors when determining reasonableness, including the interests of the disclosing and receiving parties and the business relationship between the parties.
When may an NDA be necessary
An NDA is a contract on its own, usually without another contract in place or as a precursor to other contracts. This may be necessary, for example when:
- New product / service / patent
Should you wish to discuss something new or perhaps revolutionary with someone, it is advisable to first sign an NDA to ensure that your idea remains yours.
- Secretive negotiations
When negotiating terms, it may be important to keep it confidential in order to protect both parties’ interests.
How can we help?
- Advise on a tailor-made clause for your organisation
- Draft best practice agreements / clauses
- Review existing clauses / agreements
- Implement solid confidentiality clauses to prevent legal issues in future
- Supply a standard NDA for your organisation
The information shared on this article/blog/vlog should be read and understood within the current legal framework of South Africa. It is meant purely for educational discussion and does not amount to legal advice. For specific legal advice, please consult a legal practitioner prior to application.