Compelled disclosure: Overview, definition and example
What is compelled disclosure?
Compelled disclosure occurs when a party is legally required to share confidential or sensitive information, often due to a court order, subpoena, or government regulation. This reqiurement can arise during litigation, audits, or investigations where specific documents, records, or details must be provided, even if they are protected under a confidentiality agreement.
Why is compelled disclosure important?
Compelled disclosure is important because it can override confidentiality agreements and force the release of sensitive information. It ensures transparency in legal or regulatory processes while protecting the rights of the requesting authority to access necessary details. For the disclosing party, it’s a reminder to handle confidential information carefully, as it could be subject to such demands.
Understanding compelled disclosure through an example
Imagine a technology company is involved in a lawsuit. During the proceedings, the court orders the company to disclose internal emails and documents related to its software development practices. Even if these documents were covered by confidentiality agreements, the court’s order compels the company to release them.
In another case, a business is audited by a regulatory agency. The agency demands financial records as part of the audit. The company is legally required to disclose the requested information, even if it includes sensitive details about its operations.
An example of a compelled disclosure clause
“Notwithstanding any confidentiality obligations, the Receiving Party may disclose Confidential Information if required by law, regulation, or a valid court order, provided that the Receiving Party promptly notifies the Disclosing Party and allows a reasonable opportunity to seek a protective order or other appropriate remedy.”
Conclusion
Compelled disclosure is a legal requirement to share confidential information in specific circumstances, such as a court order or regulatory demand. While it ensures compliance with legal and regulatory processes, including a clause in contracts can help protect against unnecessary disclosure and provide time to seek remedies if sensitive information is involved. Understanding these provisions helps businesses navigate their responsibilities while safeguarding their interests.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.