Confidentiality clause

Confidentiality clause, also referred to as secrecy, discretion or non-disclosure clause (the English acronym NDA for Non-disclosure agreement is also used), is intended to impose silence on the partner around the information communicated to it, such as technical, commercial, financial information, or even silence on the existence of negotiations or a contractual relationship. It imposes an obligation on its debtor not to do so.

1. 1. The confidentiality clause is applicable at all stages of the life of the contract:
   1. Before the contract: it may submit to secrecy the existence of talks and/or the information communicated on this occasion between the parties. In the context of a proposed franchise agreement, such a stipulation is common when one of the partners must give the other an overview of its methods, techniques, or know-how.
   2. During the contract: it may prohibit the communication, disclosure or exploitation of information communicated or acquired during the contract.
   3. After the contract: it may prohibit the communication, disclosure or exploitation of information transmitted or acquired during the contract, after its expiry.The debtor of the obligation of the confidentiality clause is the co-contractor. But it may also apply to third parties likely to receive the information from the co-contractor (staff, external stakeholders or operational persons, such as a subsidiary company).

      The sanction for the violation of a confidentiality clause will often take the form of compensation intended to compensate for the loss suffered and the loss of profit, compensation either provided for by the parties through a penalty clause, or pronounced by the judge (CA Paris, 17 Feb. 1997, JCP G 1998, II, No. 10000, note Fages B.; see No. 339-61: damages set at 280,000 francs).

2. 2. In the franchising agreement, the confidentiality clause is intended to protect any information, confidential knowledge or know-how, concerning the methods of operating the franchise that would have been communicated to the franchisee or of which he would have been aware in the context of the operation of his point of sale.It also tends to protect the concept of any exploitation that the franchisee may make.

   This clause is generally provided for the entire duration of the contract and after its termination, for any reason whatsoever.

3. 3. The Competition Authority does not show any hostility to the confidentiality clauses (Cons. conc., Dec. No. 96-D-36, 28 May 1996: Rec. Lamy n° 688, comm. J.-L. Respaud).

With regard to franchise, the Commission of the European Communities also affirmed, in the Pronuptia case, that ” the franchisor must be able to communicate its know-how to the franchisees and provide them with the necessary assistance to enable them to apply its methods, without risking that this know-how and this assistance benefit, if only indirectly, competitors “(ECJ, 28 Jan. 1986, Case 161/84, Pronuptia de Paris GmbH v. Paris Irmgard Schillgalis, Rec. ECJ 1986, p. 353). This position was subsequently reaffirmed by the guidelines accompanying Commission Exemption Regulation No 2790/1999/EC of 22 December 1999.

The confidentiality clause must not, however, have an anti-competitive effect (Cass. com., 27 Jan. 1998, No.96-10.694: JurisDataNo. 1998-000492; D. affaires 1998, p. 836, for an occult drawback) or prevent its debtor from taking advantage of his experience and personal ability. Otherwise, it will be treated as a non-competition clause because it deprives him of any professional capacity.