What is a breach of confidence?

To facilitate a commercial arrangement, it is often necessary for parties to share sensitive information.

When sharing such information, it is crucial that the party receiving the information keeps it confidential.

They should only pass it on to third parties with the consent of the owner.

Given the importance of keeping information confidential, individuals and businesses will often owe duties of confidence to one another.

This guide will explain what a duty of confidence is and what it means if a breach of confidence has occurred. 

Obligations of Confidentiality Under a Contract

If you are disclosing information to another party, and you want such information kept confidential, it is prudent to either: 

• execute a confidentiality agreement; or 
• have a contract with the other party which contains confidentiality provisions. 

This agreement or contract should clearly set out the parties’ respective obligations for keeping certain information confidential.

Where possible, you should:

• specify the types of information you intend to be confidential;
• set out whether the confidentiality provisions apply to both parties or just one party;
• state how the recipient can use your confidential information;
• contain any restrictions on who the recipient can share the information with; and
• specify how long the confidentiality provisions will operate for.

The Consequences of Breach of Confidence

If you have obligations under a contract to keep information confidential, and you fail to do so, you will have breached a contractual obligation.

Here, you may be legally responsible for paying compensation to the other party for this breach of confidence.

The other party may also be able to seek an injunction from a court, which will prevent you from sharing the confidential information.

They could also seek a court order for ‘specific performance’, which requires you to take steps to protect the confidential information.

If someone discloses confidential information to you that not protected under a contract, you may still be under an obligation to keep this information confidential.

This means that even if you have not entered into a written agreement with confidentiality obligations, you may still owe obligations to the person who disclosed the confidential information.

This is because a duty of confidentiality can arise not only from a contract but also when the formalities of entering into a contract have not been made out.

There are three essential elements to establish whether you have breached confidence:

1. Information Must Be Confidential

The information must actually be confidential. 

However, where an obligation of confidence has arisen due to a contract, the question of whether the information is actually confidential may depend on how the contract defines confidential information. Sometimes confidential information will include the contract document itself.

2. Circumstances Create an Obligation of Confidence

There will not always be an obligation of confidence when parties are sharing information.

Instead, it will depend on the circumstances and the relationship between the parties.

If the parties have entered into a contract containing obligations to keep information confidential, an obligation of confidence will arise. 

Certain relationships also create an obligation of confidence. 

3. Unauthorised Use of the Information

Specifying the use of the information is very important.

This means that the party who has an obligation to keep information confidential must be shown to have used the confidential information.

If the party disclosing the confidential information consented to sharing the information with a third party, it might not satisfy this element.