Confidentiality statement: Overview, definition, and example
What is a confidentiality statement?
A confidentiality statement is a formal declaration that outlines the terms under which certain information will be kept private and protected from unauthorized access, use, or disclosure. It is commonly used in business, legal, and employment contexts to establish the understanding that the information shared between parties must not be disclosed to others without permission. This statement is typically included in contracts, agreements, or policies to ensure that sensitive or proprietary information, such as trade secrets, personal data, or client details, remains confidential.
A confidentiality statement can be a part of a larger agreement, like a non-disclosure agreement (NDA), or it may be included in general terms of employment or service contracts. It clarifies the responsibilities of the parties involved and the legal ramifications of disclosing confidential information.
Why is a confidentiality statement important?
A confidentiality statement is important because it helps protect sensitive information from being exposed or misused. In business, keeping proprietary or confidential information secure is crucial to maintaining a competitive advantage, protecting intellectual property, and maintaining client trust.
For employees or contractors, a confidentiality statement sets clear expectations about their role in safeguarding company secrets, client information, and other proprietary data. It also provides legal protection in case of unauthorized disclosure, ensuring that parties understand the consequences of breaching confidentiality.
Understanding a confidentiality statement through an example
Imagine a company that is sharing detailed financial information with a potential investor. Before disclosing this information, the company asks the investor to sign a confidentiality statement. This statement outlines that the investor cannot share or use the financial details for any purpose other than evaluating the investment opportunity. If the investor breaches this agreement by disclosing the information to third parties, they could be held legally responsible for damages.
In another example, an employee in a law firm may be required to sign a confidentiality statement as part of their employment contract, agreeing to keep client information confidential even after leaving the firm. This ensures that the client’s sensitive data is protected both during and after the employee's tenure at the firm.
An example of a confidentiality statement clause
Here’s how a confidentiality statement clause might appear in an agreement:
“The Recipient agrees to maintain the confidentiality of all proprietary and confidential information disclosed by the Disclosing Party. The Recipient shall not disclose, use, or allow access to such information except as expressly authorized in writing by the Disclosing Party. This confidentiality obligation shall continue for a period of [X] years following the termination of this Agreement.”
Conclusion
A confidentiality statement is a critical tool for protecting sensitive information in business, legal, and employment relationships. By clearly outlining the expectations and legal requirements for maintaining confidentiality, this statement helps safeguard trade secrets, intellectual property, and personal data from unauthorized disclosure. Whether in a formal non-disclosure agreement or part of an employment contract, a confidentiality statement provides important legal protection for both parties and ensures that confidential information is handled responsibly.
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.