Reading time: 4 minutes

People deal with contracts in their everyday lives, sometimes without even realising it. Business owners will usually enter into legally binding written contracts that constitute how they deal with various stakeholders. These are legally enforceable as long as they have satisfied all the elements of a binding contract. This means that you can claim damages or enforce the contract in court if your contracting party fails to perform their obligations under the contract. You will often see contracts with confidentiality clauses. Sometimes, whole contracts are confidential, and you cannot disclose them to the public. This begs the question, what is confidential information in New Zealand? This article will explain how New Zealand law defines confidential information in a New Zealand contract. 

What Is Confidential Information?

Confidential information is any information that either party to the contract wants to keep secret. This information may be critical to the operation of a business or could put a business in jeopardy if released. Regulations mandate some information as confidential. However, any leak of confidential information will be considered a breach of contract. Therefore, the party who leaked the information could be liable for damages. 

Different Types of Confidential Information

Confidential Information Mandated By Law

A common type of confidential information is any information that the law has mandated. One of these laws comes from the courts and is called a breach of confidence. There does not have to be a contract in place for someone to bring a claim of breach of confidence. However, there are three criteria that you have to meet. These are that:

  • the information is not in the public domain; and
  • it is confidential – that is, someone passed it on in circumstances that made it clear they were to treat it confidentially; and
  • it was disclosed (or is about to be disclosed) without authorisation.

If you meet all three of these, you may be liable for breaching confidence. However, there is a defence if the information affects the public in a significant way.

Confidentiality Under a Contract

You can also contract confidentiality. Sometimes this is called a non-disclosure agreement, and both parties must sign for it to be binding. Your contract should expressly state what information is confidential and whether there are any circumstances where either party can release the information. You should not include information that is already available to the public. Furthermore, you should not include information that is out of your control in your confidentiality agreement. 

Your confidentiality agreement can also contain the procedure for returning any confidential information once the contract is over if it is relevant to your arrangement. 

Trade Secrets

Another type of confidential information is a trade secret. A trade secret is something that is of commercial value to a business but that only the business knows. Trade secrets are unique because if someone releases them to the public, other businesses in the same industry will be able to take advantage of them. You can protect trade secrets through contracts and non-disclosure agreements. There is no legal protection for trade secrets unless you have a patent or a duty of confidence. 

Privacy 

Another type of information that should be kept confidential is any private information. You can protect this through privacy clauses in your employment contracts. For example, if you handle sensitive information such as names or addresses, you need safeguards to prevent this information from being leaked. You can do this by making sure your employees are aware of the sensitivity of the information. Furthermore, you should enter legal contracts that bind them to keep this information private. 

If your business is found to have released private information, you could face serious fines and your business could be shut down. 

Key Takeaways

All businesses will have information that they want to keep private. The best way to do this is to draft confidentiality agreements or use confidentiality clauses in your contract. Although there are circumstances where the law will protect specific information, it is always best to draw up a contract as this is the most foolproof method to protect private information. If you need any legal assistance with contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What happens if I leak confidential information?

Depending on the circumstances surrounding it, you could be sued for breach of contract or confidence and be liable for fines.

Are trade secrets protected?

Unless there is a duty of confidence or a confidentiality agreement in place, the law does not protect trade secrets. 

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2019 Top 25 Startups - LinkedIn
  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards