Permitted disclosure: Overview, definition and example
What is permitted disclosure?
Permitted disclosure refers to the sharing of information by one party that is allowed under the terms of a contract or by law. Unlike mandatory disclosure, which is required, permitted disclosure is based on the agreement between parties or the legal rights they hold. It typically involves disclosing confidential or sensitive information in specific situations, such as sharing confidential information with employees or advisors.
This type of disclosure is usually governed by restrictions to ensure the information is only shared when necessary and in accordance with the agreement or applicable laws.
Why is permitted disclosure important?
Permitted disclosure is important because it helps businesses navigate the balance between protecting sensitive information and meeting legal or contractual obligations. It allows companies to share necessary information without violating confidentiality agreements, intellectual property protections, or privacy laws.
For businesses, clearly defining what constitutes permitted disclosure in contracts helps avoid legal risks or breaches of confidentiality. It ensures that parties can share critical information when necessary, while still protecting the integrity of their agreements and compliance with regulations.
Understanding permitted disclosure through an example
For example, a company might enter into a partnership with a third-party contractor for software development. The contract between the company and the contractor may include a permitted disclosure clause that allows the company to share certain proprietary information with the contractor, as long as the contractor agrees to confidentiality terms. This ensures the contractor can perform their duties, but prevents them from sharing or misusing the company’s confidential information.
Another example could be a business that is part of a merger and needs to disclose certain financial data to potential buyers during the due diligence process. The company may be legally permitted to share this data, but only within the confines of the deal and under strict confidentiality agreements.
An example of a permitted disclosure clause
Here’s how a permitted disclosure clause might look in a contract:
“Notwithstanding any confidentiality provisions in this Agreement, each Party may disclose information to its employees, contractors, consultants and professional advisors, provided that such disclosure is made on a need-to-know basis and subject to confidentiality obligations.”
Conclusion
Permitted disclosure allows businesses to share sensitive information when legally or contractually required, while still ensuring that confidentiality and security are maintained. By clearly defining permitted disclosures in agreements, businesses can protect their interests while fulfilling their obligations. Understanding the nuances of permitted disclosure helps businesses stay compliant and safeguard important data.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.