What is a confidentiality clause?

A confidentiality clause is a contractual provision that requires one or both parties to keep specified information secret and use it only for the agreed purpose.

What is the difference between a confidentiality clause and an NDA?

A confidentiality clause is a section inside a larger contract. A non-disclosure agreement is a standalone contract devoted to the same obligation. The substance is the same; the NDA is used when confidentiality is the whole point of the document.

How long does a confidentiality clause last?

Commercial confidentiality usually runs one to five years from disclosure. Trade secrets are often protected for as long as they remain secret, with no fixed end date.

What are the standard exceptions to a confidentiality clause?

Information that is or becomes public, was already known to the recipient, is independently developed without using the disclosed information, or is received from a third party with no duty of confidence. Disclosure compelled by law is also typically permitted, often with a notice requirement.

Is a confidentiality clause enforceable?

Generally yes, where the information is genuinely confidential and the scope and duration are reasonable. Overbroad clauses that try to protect public or trivial information are harder to enforce.

What is the difference between a one-way and mutual confidentiality clause?

In a one-way clause, only one party discloses and the other protects. In a mutual clause, both parties disclose and both protect. Mutual clauses are standard when both sides share sensitive information, as in a partnership or merger evaluation.

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Confidentiality Clause

A contractual provision requiring one or both parties to keep specified information secret and use it only for an agreed purpose.

Reviewed by

GC AI Solutions Team

•

Updated

June 2026

Definition

A confidentiality clause is a contractual provision that requires one or both parties to protect specified information, use it only for the agreed purpose, and not disclose it to others. It defines what counts as confidential, who may receive it, how long the duty lasts, and the standard exceptions: information that is public, already known, independently developed, or compelled by law. Confidentiality clauses appear both as a section inside a larger contract and as a standalone non-disclosure agreement (NDA). Courts generally enforce them where the information is genuinely confidential and the scope is reasonable.

Defines what counts as confidential, by category or by marking
Limits the recipient to using the information only for the agreed purpose
Sets who may receive it, such as employees and advisers, under the same duty
Fixes the duration of the obligation, commonly one to five years, or indefinite for trade secrets
Carves out public, already-known, independently developed, and legally compelled information

Defined terms of one to three years have become the norm for ordinary commercial confidentiality, with indefinite protection reserved for trade secrets.

What It Does

A confidentiality clause draws the line around what the other side can do with the information you share. For in-house counsel, it is the first clause that matters in any partnership talk, vendor evaluation, or financing process, because it governs the diligence data, roadmaps, and pricing you hand over before there is a deal. It does three things: it defines confidential information, it limits use and disclosure, and it sets how long the duty survives. The exceptions matter as much as the obligation, because they decide what the recipient can later argue was never covered.

When You'll See It

A confidentiality clause appears in nearly every commercial relationship, either as a standalone NDA at the start of talks or as a section within the main agreement: SaaS and vendor contracts, partnership and reseller agreements, M&A and financing diligence, and employment agreements. In-house teams see it first and most often, because nothing of substance gets shared until it is signed. The negotiation turns on the definition of confidential information, the term, and whether the obligation is one-way or mutual. See also: non-disclosure agreement, intellectual property, and non-solicitation.

Examples

Hanryu Bank Co., Ltd.

Kingdom Holdings, Business Transfer Agreement

Standard exceptions

One-Sided

2023

"the Seller shall keep confidential all data, trade secrets, proprietary secrets and any other confidential information regarding the Acquired Assets and not disclose such confidential information to anyone other than Purchaser, except with the express written consent of Purchaser or as required by Law. Confidential information shall not be deemed to include information (i) that is or becomes generally available to the public ... (ii) is or becomes available to Seller from any person who is not subject to any confidentiality obligation ... (iii) is developed [independently]."

Source

Beijing Tongzhilian Cultural Development Co., Ltd.

Beijing Jiguantong Technology Co., Ltd., Cooperation Agreement

Agreement terms + trade secrets

Mutual

2024

"Except otherwise agreed herein, any party shall keep confidential the contents of this Agreement and any trade secrets of the other party learnt in execution of this Agreement, including but not limited to the price of the products or services of other party, customer information, and disputes related to the cooperative project, and shall not, without consent of the other party, use or disclose the same."

Source

TD SYNNEX Corporation

Board Advisor, Advisor Agreement

Standard exceptions (i/ii/iii)

One-Sided

2024

"Notwithstanding the foregoing, Confidential Information shall not include information that: (i) was publicly known and generally available in the public domain prior to the time of disclosure to Advisor; (ii) becomes publicly known and generally available after disclosure to Advisor through no action or inaction of Advisor; or (iii) is in the possession of Advisor, without confidentiality restrictions, at the time of disclosure as shown by Advisor’s files and records immediately prior to the time of disclosure."

Source

Dollar General Corporation

John W. Garratt, Engagement Letter

Public-knowledge exception

One-Sided

2023

"Confidential Information shall not include information that is or becomes public knowledge without any action by, or involvement of, you."

Source

Ballengee Holdings, LLC

Vivakor Administration, LLC, Transition Services Agreement

Use-limited

Mutual

2024

"Each Party shall keep confidential all Confidential Information that the other Party has disclosed or may hereafter disclose directly or indirectly to it as a result of or in the course of performance of this Agreement. Such Party shall use such Confidential Information only as necessary to perform this Agreement, and shall not disclose to third parties..."

Source

Negotiate

If you're the disclosing party

YOU WANT PROTECTION

Define confidential information broadly, by category, and avoid a marking requirement that would exclude anything you forget to stamp.
Bind the recipient’s employees, affiliates, and advisers to the same duty.
Set a term long enough to cover the information’s useful life, and keep trade secrets protected for as long as they stay secret.
Require return or destruction of the information on termination.
Limit the compelled-disclosure exception with a notice-and-cooperation requirement.

If you're the receiving party

YOU WANT TO LIMIT EXPOSURE

Narrow the definition and add a written-designation requirement.
Keep the standard exceptions: public, already known, independently developed, third-party source.
Cap the term at one to three years for ordinary commercial information.
Add a residuals clause so general knowledge retained by employees is not a breach.
Exclude information you already held before disclosure.

Red Flags

A definition so broad it covers information the recipient already had or can find publicly.
An indefinite term applied to ordinary commercial information rather than to trade secrets.
Missing standard exceptions, so the recipient is liable even for disclosing public information.
A compelled-disclosure carve-out with no notice requirement, so you learn of a subpoena after the fact.
One-way obligations in a relationship where both sides share sensitive information.

FAQs

Related Clauses

Non-Solicitation

A contractual provision that bars a party from poaching the other side's customers or employees for a set period.

Survival

A contractual provision that keeps specified obligations enforceable after the agreement expires or is terminated.

Assignment

A contractual provision that controls whether a party can transfer its rights or obligations under the contract to a third party.

Indemnification

A contractual provision in which one party agrees to cover specified losses or third-party claims that the other party incurs.

Governing Law

A contractual provision that selects which jurisdiction’s substantive law will be used to interpret and enforce the agreement.

Data Protection (DPA)

A provision, often a standalone data processing agreement, that governs how a vendor processes personal data on a customer's behalf and meets privacy-law requirements.

This content is for informational purposes only and does not constitute legal advice.

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