CMA Foundation · Fundamentals of Business Laws and Business Communication · Legal Aspects of Business Communication
Which of the following best describes a confidentiality clause in a business communication agreement such as an NDA?
A confidentiality clause obliges a party who receives sensitive business information not to disclose it to outsiders. Its purpose is to protect trade secrets, plans and data shared during dealings, so it restricts disclosure rather than requiring publication, fixing prices or permitting free sharing.
- AA clause that requires both parties to publish all shared information
- BA clause that obliges a party not to disclose specified sensitive information to outsidersCorrect
- CA clause that fixes the price of goods supplied
- DA clause that allows either party to share information freely with competitors
Explanation
A confidentiality clause restricts disclosure of specified sensitive information to third parties. Publishing everything or sharing freely with competitors is the opposite of its purpose, and price fixing relates to a different contract term.
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