In the above case Lord Denning MR established the principle that even if you do not have a confidentiality agreement in place, under equity law a person who has received information in confidence cannot take unfair advantage of it. That person must not make use of it to the prejudice of the person who gave it without obtaining his consent.
What is the purpose of a confidentiality contract?
- It creates certainty;
- it establishes a contractual obligation;
- the confidentiality ensures enforcement and supports a claim under general law because it creates the relationship of confidence that is the basis of many claims;
- it sets out in detail the conduct which the disclosing party expects from the recipient).
In short confidentiality agreements MUST be entered into in any commercial negotiations. For example
- Employment and consultancy contracts.
- Share or asset acquisitions.
- IPR purchases and sales.
- Patent discussions.
- Recommended takeover bids.
- Joint ventures.
- Research and development collaborations.
- Licences and assignments of technology.
- Distribution and long-term supply arrangements.