Business Contracts | The Confidentiality Clause in Contracts with Key Partners as a Tool to Protect the Brazilian Company’s Business

Although confidentiality clauses are an essential element in contracts, their use in Brazil is increasingly indiscriminate, without the necessary personalization to guarantee the protection of strategic and sensitive information shared between the parties.

Understanding what the relationship is and in what contexts this clause will eventually be enforced is essential for its effectiveness.

Therefore, we highlight 3 fundamental precautions for creating a robust and effective confidentiality clause to be used in Brazilian contracts.

1. Mapping of Confidential Information: Even before starting commercial negotiations with the service provider, commercial partner, etc. It is essential that there is a careful mapping of what information the company needs to protect. It could be the customer portfolio, information about suppliers or even marketing strategies. Understanding what could impact the business is a key part of drafting the clause.

2. Construction of Specific Clauses: Once the sensitive points that deserve protection are well known, the next step is to define which clauses will be necessary to protect them. Just the confidentiality clause may be sufficient in many contracts, but some deserve special attention, and non-competition and non-enticement clauses can be essential to complement the objective of protecting the business.

3. Establish Sanctions: Unfortunately, simply preventing the sharing of information is not enough to prohibit unfair and unethical conduct. Clearly predicting which sanctions will be applicable, with heavy fines and, eventually, prediction of losses and damages is one of the essential requirements for the successful execution of the clause. Sanctions can even be more comprehensive, even providing for communication to third parties about non-compliance.

Whether in commercial agreements, partnerships or service provision relationships, this clause establishes clear limits on the use and disclosure of confidential data, preventing information leakage and unfair competition. In addition to strengthening legal security, its inclusion demonstrates commitment to transparency and the protection of the interests involved, making it an indispensable practice if well applied, specially considering that Brazilian courts does enforce confidentiality clauses.

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