confidentiality obligation
Definition
A confidentiality obligation is a legal duty that requires you to keep certain information private and not share it with people outside an agreed-upon group. When you sign a contract containing this obligation, you are legally promising to protect sensitive information you receive from the other party, such as trade secrets, customer lists, or business strategies. Breaking this promise can expose you to lawsuits and serious financial penalties.
Example
If you hire a web developer and have them sign a contract with a confidentiality obligation, they are legally required to keep your proprietary software code and business processes secret, even after they stop working for you.
Watch Out
Pay close attention to how long the confidentiality obligation lasts, because some contracts require you to keep information secret indefinitely, which can restrict what you share with future business partners or employees.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.