Permitted Disclosure Clause Explained

Plain-English Explanation

A "Permitted Disclosure" clause in a non-disclosure agreement (NDA) explains when it's okay to share confidential information. Normally, an NDA stops you from telling others what you've learned. But this clause lists exceptions, or times when sharing is allowed.

For example, you might be allowed to share information with certain people, like your lawyer or accountant, who need to know it to do their job. It might also let you disclose information if the law requires it, like if a court orders you to share it.

This clause helps everyone know the rules about when it's okay to talk about the confidential stuff. It makes sure that both sides understand when sharing is allowed without breaking the agreement.

Why This Clause Exists

The Permitted Disclosure clause exists to balance confidentiality with practical needs. Businesses often need to share information with certain people to get advice or comply with the law. This clause makes sure they can do that without breaking the NDA.

It also helps protect the parties involved by clearly outlining situations where sharing information is necessary or unavoidable. This way, both parties know what to expect and can plan accordingly.

Common Risks to Watch For

• The clause may be too vague about who can receive the information.
• It could allow too many exceptions, weakening the NDA.
• The clause may not clearly define what "required by law" means.
• It might not specify how to handle accidental disclosures.
• The clause could be one-sided, favoring one party over the other.

Example in Plain English

Imagine you work for a tech company and signed an NDA with a partner company. The Permitted Disclosure clause allows you to share confidential project details with your company's lawyer to get legal advice. One day, you receive a court order demanding certain documents. Thanks to the clause, you can share the required information with the court without breaking the NDA.

When This Clause Causes Issues

• If the clause is too broad, it might lead to more information being shared than intended.
• Misunderstandings can happen if it's unclear who is allowed to receive the information.
• Problems may arise if one party thinks the other is sharing information too freely.

What to Do Before You Sign

• Ask whether the clause clearly defines who can receive the information.
• Question how "required by law" is explained in the clause.
• Consider if the clause allows too many exceptions.
• Inquire about how accidental disclosures are handled.
• Check if the clause seems fair to both parties involved.