Contract Glossary
Confidential Information
Definition
Confidential information is any data, knowledge, or material that a party discloses under a duty of secrecy. Contracts define it explicitly — covering documents, trade secrets, financial records, customer lists, business plans, and technical know-how — so both sides know exactly what must be protected and what falls outside the obligation.
In Practice
A startup shares its proprietary algorithm, customer acquisition costs, and revenue projections with a potential acquirer during due diligence. The term sheet defines all of this as 'Confidential Information' — meaning the acquirer can review it to evaluate the deal but cannot share it with their portfolio companies, use it to build a competing product, or disclose it if the deal falls through. Without a clear definition, the acquirer could argue that general market insights gleaned from the data weren't protected.
Example Clause
'Confidential Information' means all non-public information disclosed by the Disclosing Party, whether orally, in writing, or electronically, including but not limited to business plans, financial data, customer lists, technical specifications, source code, algorithms, marketing strategies, and any information identified as confidential at the time of disclosure.
Common in these contract types
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Frequently asked questions about confidential information
Typically anything the disclosing party designates as confidential — trade secrets, business plans, financial statements, customer data, pricing models, proprietary technology, and internal processes. Good contracts define it broadly but include specific examples. Information that is publicly available, independently developed, or lawfully obtained from a third party usually does not qualify, even if it would otherwise be sensitive.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.