How to Negotiate A Confidentiality Clause
Negotiate a confidentiality clause by making sure it is mutual where both sides actually share sensitive information, checking the standard carve-outs are present, and matching duration to how long the information will genuinely stay sensitive. An overly broad, one-sided, or perpetual obligation is harder to comply with in practice than a precisely scoped one, without adding real protection.
This guide describes general, widely-used commercial negotiation practice — it is informational, not legal advice on any specific contract. The right position for your deal depends on your actual leverage, relationship, and governing law. Have your actual clause reviewed by a lawyer before relying on any of this.
What each side typically wants
Wants a broad definition of confidential information, a long (or indefinite) duration, and strict limits on the other side's use and further disclosure.
Wants a clearly bounded definition, standard carve-outs (public information, prior knowledge, independent development, legal compulsion), and a duration proportionate to the information's actual shelf life.
Red flags worth pushing back on
- No carve-outs for information that is already public, already known, independently developed, or legally required to be disclosed
- Perpetual confidentiality obligation applied to routine business information, not just genuine trade secrets
- One-sided obligation when both parties are actually sharing sensitive information
- Definition of confidential information broad enough to cover everything exchanged, including information neither side actually treats as sensitive
- No carve-out preserving the right to make legally protected disclosures (e.g. to a regulator or in response to a valid legal process)
How to negotiate it
- Make the obligation mutual whenever both sides genuinely share sensitive information
- Insist on the standard carve-outs — public information, prior knowledge, independent development, legal compulsion
- Scale duration to the information — a few years for ordinary commercial data, longer only for genuine trade secrets
- Narrow the definition of confidential information to what is actually marked or reasonably understood as confidential, rather than "anything exchanged"
- Add an express carve-out preserving legally protected disclosures, including to regulators or under whistleblower protections where relevant
Sample fallback language
"Each party shall keep the other's Confidential Information confidential for [3] years following disclosure, except information that is or becomes public through no fault of the receiving party, was already known to it, is independently developed, or must be disclosed by law."
Illustrative starting language only — have it reviewed and adapted to your actual deal and governing law before using it.
Frequently asked questions
Should a confidentiality clause ever be indefinite?
Sometimes, but usually only for genuine trade secrets rather than ordinary commercial information — an indefinite obligation over routine business data is both impractical to comply with and, in some jurisdictions, harder to enforce than a proportionate, time-bound one.
Why does mutuality matter if I am the one sharing more sensitive information?
Even an asymmetric relationship usually involves some sensitive information flowing both ways (pricing, technical details, internal processes) — a one-sided clause leaves your own disclosures unprotected, which is worth checking even when you expect to be the primary discloser.
Don't negotiate this alone.
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