Pactora Clause Guide
Confidentiality
The confidentiality clause (or NDA) sets out what information must be kept secret, how long that obligation lasts, and the limited circumstances in which disclosure is permitted.
This guide was written by Sneha Ganapavarapu, a qualified lawyer with experience in commercial contracts across technology, IP, and energy sectors. All legal sources are linked. This is general legal information, not legal advice. Always consult a qualified solicitor before signing any contract that matters to your business.
Plain English
What it is
A confidentiality clause restricts what each party can say about the other's business, data, and know-how. It defines what counts as confidential information, who can receive it, and what happens to it when the relationship ends.
In a standalone NDA the whole document serves this purpose. In a larger services agreement it is typically one clause among many. Both raise the same issues: scope, duration, carve-outs, and whether the obligation binds both sides equally.
For UK freelancers & small businesses
What reasonable looks like
Mutual obligations binding both parties equally.
A precise definition of confidential information tied to what is actually shared — not everything either party has ever known.
Standard carve-outs for information that is publicly available, independently developed, or received from a third party without restriction.
A fixed duration — typically two to five years after disclosure or termination.
Permitted disclosure to employees and advisers on a need-to-know basis, with an obligation to ensure they are similarly bound.
Obligations to return or destroy confidential information on request or at termination.
Watch out for
Red flags
One-sided obligation binding only you, leaving the other party free to share what you tell them.
An overbroad definition covering anything "relating to" the disclosing party's business, regardless of whether it was marked confidential.
A residuals clause — language allowing the receiving party to use information "retained in the unaided memory" of its staff freely, without restriction.
Indefinite duration with no end date or sunset provision.
Permitted use for AI model training or product improvement.
Missing carve-outs for publicly available information or independent development.
No obligation to return or destroy confidential information at the end of the relationship.
England & Wales
Market standard UK position
Mutual obligation on both parties.
Definition limited to information marked confidential or identified as such at disclosure.
Standard carve-outs: publicly available, independently developed, received from a third party, required to be disclosed by law.
Two to five-year duration after termination.
Disclosure to employees and professional advisers permitted on a need-to-know basis.
Return or destruction obligation on termination.
Legal advice triggers
Ask your lawyer if…
The obligation is one-sided.
The definition of confidential information is broad enough to cover information you share in ordinary business conversation.
There is a residuals clause.
The duration is indefinite or longer than five years.
There is no carve-out for information you already knew or independently develop.
References
Legal sources
Coco v AN Clark (Engineers) Ltd [1969] RPC 41 — the foundational English authority setting out the three elements of the equitable duty of confidence.
Faccenda Chicken Ltd v Fowler [1987] Ch 117 — on the scope of confidentiality obligations and the distinction between trade secrets and general know-how.
UK GDPR and Data Protection Act 2018 — applies where confidential information includes personal data.
Trade Secrets (Enforcement, etc.) Regulations 2018 — implements the EU Trade Secrets Directive in UK law.
Read more
Further reading
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