Confidentiality information in some types of contract

As analyzed in the previous article, confidentiality plays an important role in protecting rights and binding obligations to the contracting parties. In order to support clients to flexibly apply confidentiality clauses, in this article, TNTP will share with you some provisions on confidentiality clauses in some types of Contracts.

1. Provisions on confidentiality in some types of Contracts

Some content about confidentiality clauses/agreements in some typical types of contracts, specifically:

1.1 Confidentiality clause in the Labor Contract

According to Clause 2, Article 21 of the Labor Code 2019, If the employee’s job is directly related to the business secret, or technology secret as prescribed by law, the employer has the right to sign a written agreement with the employee on the content and duration of the protection of the business secret, technology know-how, and on the benefit and the compensation obligation in case of violation by the employee.

Employers need to list clearly and in detail about confidentiality such as:

What kind of information and documents are considered business secrets or technology secrets in the confidentiality clause. If it is not possible to list them all, the employer can provide criteria to determine which information and documents are considered business secrets or technology secrets.
The principles that employees must follow to keep business and technology secrets confidential are as follows: Do not disclose, copy and distribute Confidential Information in any form to anyone inside or outside the Company; Not to bring any documents containing Confidential Information out of the scope of the Company without the written permission of the legal representative of the enterprise; …
Stipulate the effective time and geographical scope of the clause depending on the industry, and position of the employee.
Stipulate the forms of disciplinary action and compensation for damage when employees violate.

1.2 Confidentiality clause in the Economic Contract

In commercial contracts, confidentiality is also focused on, especially in some important areas that greatly affect the interests of enterprises such as: legal, intellectual property, …

For example, in franchising activities, the obligation on confidentiality is specified in Clause 4, Article 289 of the 2005 Commercial Law:

“Unless otherwise agreed, franchisees shall have the following obligations:

To keep secret the franchised business secret even after the expiration or termination of commercial franchise contracts.”

Hence, the obligation on confidentiality is not only complied with during the performance of the contract but is also valid when the contract is terminated. The parties when performing commercial franchising need to stipulate on confidentiality as of the time the parties start negotiating because, in this stage, the parties must exchange confidential information such as business advantages, revenue, etc. for the parties to consider the implementation of the franchise.

1.3 Confidentiality clause in the intellectual property contract

Some common contracts in this field include technology transfer contracts, trademark transfer contracts, work use contracts, scientific research contracts, etc. Deriving from the important nature of this field, confidentiality is always regulated in the contract.

Accordingly, in an intellectual property contract, the parties need to clearly stipulate and explain confidential information, legal terms, and specialized terms so that the parties have grounds to deal with when disputes appear, including disputes over trade secrets. The parties may consider stipulating some of the following contents in the confidentiality clause:

On the basis of the confidential information provided, the receiving party undertakes absolutely not to provide confidential information to any third party unless there is the prior written consent of the information provider. Neither party may disclose the contents of the Contract without the prior written consent of the other party, except in cases where it is required by law.
The party receiving the information undertakes to compensate the information provider for any damage arising from the breach of confidentiality commitments under the Contract.

2. Consulting services, drafting contracts

In order to minimize risks for businesses when entering into contracts, TNTP is currently providing drafting and reviewing services of documents and contracts for businesses. For detailed information about the service, please see details here.

Best regards,