This contract tip is about the requirement to destroy or return all confidential information.
Most NDAs and confidentiality provisions require the receiving party to destroy or return all confidential information upon request or after termination.
We are all grownups here, so let's be honest with each other.
How many companies do you estimate actually destroy or return 100% of it?
My estimate? 1%
Wait, maybe that is too generous. It is probably closer to .1% or .01%.
The reason that so few comply is because, as these clauses are often written, it is impossible to do so.
We live in a world where most of the confidential information is stored in digital format. Even if we try to delete, there are backups and backups of those backups.
And even if a company is amazing at record retention practices, I guarantee that some of the counterparty's information is still in a file somewhere.
We need to move to a more workable and realistic approach. My preference is:
- Exclude any confidential information stored in accordance with its record retention policies
- Require ongoing compliance with the confidentiality and non-use obligations for so long as it's there.
What is your compliance estimate and preferred approach?
