Articles > Contracts

How do time limits in confidentiality agreements work?

August 3, 2022   Philip EvangelouRaphaella Revis

A confidentiality agreement often specifies the length of time that the information is to be kept confidential. In order to determine how these limits work and differ, it is first important to look at what a confidentiality agreement is and the types that exist.

What is a confidentiality agreement?

This refers to a legally binding document between relevant parties/stakeholders that ensures that discussions and information shared between them are kept confidential and not disclosed to other people. 

What is a confidentiality deed?

A deed is similar to a confidentiality agreement, but may be more suitable depending on the type of situations as it does not require the element of consideration (legal jargon meaning that each party must have something to exchange) which can at times be difficult to determine.

What is the term of a confidentiality agreement?

A confidentiality agreement may be either fixed term or not fixed term. The term itself refers to the time limit (duration) that the information is kept confidential and not closed.

  • Fixed Term
    • The information is confidential for a fixed timeframe specified in the agreement (ordinarily three years but is up to the parties involved to determine).
    • The time limit may depend on the nature of the information; for example, three years might not be enough for an emerging startup, or excessive depending on the matter.
    • After the term has ceased, the information can then be disclosed and is no longer confidential between the agreed parties.
  • Not Fixed Term
    • There is no specified time limit for when the information becomes disclosable; it is confidential until the parties agree to terminate the confidentiality agreement.

What about time limits after the term?

A clause can be inserted in the confidentiality agreement that the information still remains confidential for a time limit beyond the initially specified term. This is possible even after the agreement has terminated and provides additional safeguards by imposing further confidentiality obligations. 

Time Limits for Breaches

There are also time limits on how long after a confidentiality agreement has been breached can action still be taken. While it depends on the jurisdiction, the time frame for breaches in New South Wales is up to six years after a breach. Importantly, the same rule applies to breaches of a confidentiality deed, with the time frame being up to twelve years instead. 

What’s Next?

It is important for you to know what time limit is best for your situation to ensure legal protection, as well as the difference between a confidentiality deed and agreement. For more information or assistance, get in touch with our team via the contact form or by calling 1300 337 997.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.

About Raphaella Revis

Raphaella RevisRaphaella is a legal intern at OpenLegal and is currently a second year student studying Bachelor of Law and Science in Information Technology at UTS. Her interests are legal tech, contracts and IP.