March 7, 2019

Confidential information meaning & a sample clause

Photo by Deleece Cook on Unsplash

Confidential information meaning & a sample clause

Updated: 6 December 2019

There's a reference to confidential information in many business contracts. 

But what's the court's view on what's confidential?

Below are the factors that the courts consider when determining if information is confidential. 

 In Wright v Gasweld, the court lists factors to determine whether information is confidential. 

Confidential information criteria

1. The extent to which the information is known outside the business.

2. The extent to which the trade secret was known by employees and others in the plaintiff’s business.

3. The extent of measures taken to guard the secrecy of the information.

4. The value of the information to the plaintiffs and their competitors.

5. The amount of effort or money spent by the plaintiffs in developing the information.

6. The ease or difficulty to get or copy the information.

7. Whether it was plainly made known to the employee that the material was by the employer as confidential.

8. The fact that the usages and practices of the industry support the assertions of confidentiality.

9. The fact that the employee is able to share the information only by reason of her or his seniority or high responsibility.

10. That the owner believes these things to be true and that belief is reasonable.

11. The greater the handling of the “confidential” material the greater the obligation of confidentiality.

12. That the information can be readily identified.

And, here’s an example of what a confidentiality clause looks like:

Sample - Confidential information clause

Each party agrees that all information in relation to:

(1) the other party’s Business; or

(2) the Company or any related body corporate of the Company or any Business conducted by such entity, including, but not limited to:

  •  any trade secrets, operations know-how, or any information concerning the organisation, management and finance of the other party or the Company, or any of its related bodies corporate, which is exchanged between them under this agreement, or acquired during the negotiations prior to the execution of this agreement, is confidential and must not be disclosed, divulged or otherwise placed at the disposal of any person not being a Party to this agreement except:
    • to employees, legal advisors, auditors and other consultants requiring the information for the purposes of this agreement; or
    • with the consent of the Party who supplied the information; or
    • if the information is prior to the execution of this agreement, lawfully in the possession of the recipient of the information through sources other than the Party who supplied the information; or
    • if required by law or a stock exchange regulations; or
    • if the information is or becomes generally and publicly available other than through the default of a Party who divulges the information. 

(3) The provisions of this clause continue in full force and effect after the termination of this agreement.

Do you have questions or comments about confidential information? Leave them below.

I wish you success in your ventures!


About the author 

Vivian Michael

As founder and lawyer at Michael Law Group, Vivian advises Australia's top entrepreneurs on business and employment matters. Clients benefit from Vivian's commercially focussed and pragmatic legal advice, business experience, and commitment to deliver the best quality business legal services to her clients.

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