Letter of confidentiality (mutual)

Letters of confidentiality, like confidentiality agreements and non-disclosure agreements, aim to protect confidential information by requiring the recipient to keep it secret. A letter of confidentiality is really no different to a confidentiality agreement except it is generally less formal. They are usually entered into at an early stage of any negotiations, particularly those which involve the disclosure of information. 

What is confidential information?

It’s tempting to make the definition of confidential information as wide as possible. However, this may not always be effective as in order to be capable of protection, the information in question must first have the necessary quality of confidence. Taking such an approach carries the risk that the court will find the definition too wide to be enforceable.

To be protected, confidential information must be:

• confidential in nature, meaning that it must have the “necessary quality of confidence”
• disclosed in circumstances importing an obligation of confidence.

Timing of disclosure of confidential information

Ideally, a letter of confidentiality should be entered into before any confidential information is disclosed. However, this may not always occur in practice. This letter therefore includes the option of extending the recipient’s obligation to capture the disclosure of relevant information that has taken place before the confidentiality agreement is signed.