If you run a small business, “confidential information” isn’t just a legal phrase - it’s often the thing that makes your business valuable.
It might be your pricing model, customer list, supplier terms, manufacturing process, source code, marketing strategy, product roadmap, or the commercial details of a deal you’re negotiating. If that information leaks (even accidentally), it can quickly turn into lost revenue, reputational harm, or a competitor getting a head start.
That’s where a deed of confidentiality comes in. It’s one of the most practical (and commonly used) legal tools for protecting sensitive information when you’re dealing with employees, contractors, suppliers, partners, investors, or potential buyers.
Below, we’ll walk you through what a deed of confidentiality is, when it makes sense for your business, and how to draft one that actually protects you in the real world.
What Is A Deed Of Confidentiality (And What Does It Actually Do)?
A deed of confidentiality is a legal document where one party (or both parties) agrees to keep certain information confidential and only use it for an agreed purpose.
In plain English: it’s a written promise that “you can see this sensitive information, but you can’t share it, misuse it, or use it against us.”
Confidential information can be almost anything that isn’t public and gives your business an advantage. Common examples include:
- customer lists and customer behaviour data
- pricing, margins, quoting methods and internal costings
- supplier agreements, wholesale rates and logistics arrangements
- business plans, product roadmaps and strategic planning documents
- software, technical documentation and source code
- marketing strategy, ad account insights and campaign performance
- operational processes and internal training materials
- financial information, investor materials and pitch decks
The best deed of confidentiality doesn’t just say “everything is confidential” and leave it at that. It clearly describes what information is protected, how it can be used, and how it must be handled.
Why Use A Deed Instead Of A “Normal” Agreement?
A deed is a particular type of legal document. One reason businesses use a deed of confidentiality is that (unlike a standard contract) it generally doesn’t rely on “consideration” (something of value being exchanged) in the same way. That can reduce arguments about whether the confidentiality promise is binding in situations where nothing has been paid yet.
That can matter in situations like:
- early-stage discussions before any money changes hands
- sharing information as part of a potential partnership
- talking to a potential investor or buyer
- disclosing information during due diligence
That said, a deed isn’t automatically “stronger” in every scenario. Enforceability still depends on how the deed is drafted, whether it’s properly executed, and whether the obligations are reasonable and workable in practice.
In many day-to-day commercial relationships, a standard confidentiality agreement may also work well - but understanding the difference helps you pick the right tool for the job (more on that below).
When Does Your Business Need A Deed Of Confidentiality?
You generally want a deed of confidentiality whenever you’re about to share sensitive information with someone outside your “need to know” circle - and you want clear, written boundaries before you share it.
Here are common situations where a deed of confidentiality is worth considering.
1) You’re Hiring Contractors Or Freelancers
Contractors often need access to your systems, customers, strategy or internal documents - and they’re not employees.
Yes, confidentiality clauses can be included inside a broader contractor agreement, but a deed of confidentiality can also be used when you’re not ready to finalise the full commercial deal yet (or where multiple contractors will access the same information).
If you’re engaging contractors on an ongoing basis, it’s also worth getting your broader engagement terms right with a tailored Contractors Agreement.
If you’re disclosing product designs, formulations, specifications, supplier lists, or pricing structures, confidentiality is critical.
Without it, the supplier could (intentionally or unintentionally) pass your information on, or use it to deal directly with your customers.
3) You’re Pitching To Investors Or Talking To Potential Buyers
Fundraising and business sale discussions often involve sharing sensitive business and financial information before there’s a signed deal.
A deed of confidentiality can help you set ground rules early - including what the information can be used for (for example, “evaluating the investment”), who can see it, and what happens to the documents if the deal doesn’t proceed.
4) You’re Entering A Partnership, Joint Venture Or Referral Arrangement
Even if you trust the other side, relationships change - and people move on. If you’re sharing customer data, marketing strategy, systems, or commercial terms, you’ll want confidentiality obligations that survive the excitement of the early stage.
Employees should usually have confidentiality obligations built into their employment terms. A standalone deed can be useful for senior roles, access to particularly sensitive projects, or where you want additional clarity around handling information.
It’s also a good idea to ensure the employment relationship is properly documented with an Employment Contract that matches the role, the award coverage (if applicable), and your business’s risk profile.
Deed Of Confidentiality Vs NDA Vs Contract: What’s The Difference?
In Australia, people often use these terms interchangeably. But there are practical differences, and understanding them helps you avoid using the wrong document (or assuming you’re protected when you’re not).
Deed Of Confidentiality
- Best for: early discussions, negotiations, one-sided disclosures, or where you want a document that doesn’t depend on consideration
- Common use cases: investor discussions, M&A due diligence, commercial negotiations
- Key feature: generally does not rely on “consideration” in the same way a standard contract does, but still needs proper drafting and execution
Non-Disclosure Agreement (NDA)
An NDA is usually a contract (not always a deed), but its purpose is the same: protecting confidential information.
Many businesses use an NDA as the everyday “confidentiality document” for sharing information with third parties.
If you want a clean, practical document for standard commercial dealings, a tailored Non-Disclosure Agreement can be a great option.
Confidentiality Clauses Inside A Bigger Agreement
Sometimes, the best approach is building confidentiality into the main commercial agreement (for example, a services agreement, supplier agreement, or employment agreement).
This is often more efficient because the confidentiality obligations match the real relationship - including IP ownership, payment terms, termination rights, and what happens at the end of the engagement.
The key takeaway is this: you’re not choosing between “confidentiality” or “no confidentiality”. You’re choosing the document structure that best fits the commercial reality.
What Should You Include In A Deed Of Confidentiality?
A deed of confidentiality is only as strong as its clauses. If it’s vague, overly broad, or missing key mechanics, it can be hard to enforce (or easy to argue around).
Here are the clauses we typically recommend you think through.
1) The Parties And The “Purpose”
Start with the basics: who is disclosing the information, who is receiving it, and what is the permitted reason for disclosure (often called the Purpose).
For example:
- “evaluating a potential supply arrangement”
- “providing marketing services”
- “considering an investment in the company”
The Purpose matters because it limits how the other party can use your confidential information.
This is where you reduce grey areas.
A strong definition usually covers:
- information disclosed in writing, verbally, visually, or electronically
- information marked as confidential and information that should reasonably be understood as confidential
- derivative information (for example, summaries, notes, analysis created from the confidential information)
Many businesses also include a carve-out for information that is genuinely public, or already known to the recipient independently.
3) Confidentiality Obligations (Non-Disclosure, Protection, Limited Use)
This is the core promise. Typically, the receiving party must:
- not disclose the confidential information to third parties (except as permitted)
- only use the confidential information for the Purpose
- take reasonable steps to protect the information (for example, secure storage and restricted access)
If your confidential information is particularly sensitive (like source code, health data, or payment information), it’s worth being specific about security standards and access controls.
4) Who Can They Share It With?
In real life, the recipient may need to share information internally (for example, with employees, directors, professional advisers, or contractors) to actually do the job.
Your deed should set clear boundaries, such as:
- sharing is only permitted with people who need it for the Purpose
- those people must also be bound by confidentiality obligations
- the recipient remains responsible for any breach by their people
5) Exclusions And Compelled Disclosure
Most deeds include exclusions for information that:
- is already public (through no fault of the recipient)
- was lawfully known before disclosure
- was independently developed without using the confidential information
There’s usually also a “compelled disclosure” clause - for example, if the recipient is required by law or a regulator to disclose information. A good deed should require the recipient to notify you (where possible) and disclose only what is required.
If the project ends, the deal doesn’t go ahead, or you ask for it back, your deed should cover what happens next.
Common options include:
- returning documents and materials
- permanently deleting electronic copies
- confirming destruction in writing
This clause becomes especially important during commercial negotiations, where you might share lots of documents early, then decide not to proceed.
7) Term And Survival Period
How long should confidentiality obligations last? It depends on what you’re disclosing.
Some information becomes stale quickly (like short-term marketing plans). Other information (like trade secrets) can remain valuable for years.
Many deeds set:
- a term for the deed itself (for example, 1-3 years), and
- a survival period where confidentiality continues after the relationship ends (for example, 2-5 years)
For true trade secrets, you may want confidentiality obligations that last as long as the information remains confidential.
8) Remedies And Enforcement
If there’s a breach, you’ll usually want the right to seek urgent court orders (injunctions) to stop further disclosure, not just claim damages later.
A well-drafted deed can help support that by:
- acknowledging that damages may not be an adequate remedy
- allowing the disclosing party to seek injunctive relief
Confidential information and personal information aren’t the same thing, but they often overlap.
If you share customer information that identifies individuals, you may also have privacy obligations - especially if you’re covered by the Privacy Act or you’re handling sensitive data.
It’s worth making sure your broader compliance framework (including your Privacy Policy) aligns with how you share and protect information in practice.
How To Draft A Deed Of Confidentiality: A Practical Step-By-Step For Small Businesses
Drafting a deed of confidentiality doesn’t need to be overwhelming. The key is to base it on the real risks in your business, not a generic template you found online.
Here’s a practical process you can follow.
Step 1: Identify What You’re Actually Trying To Protect
Before you draft anything, list the categories of confidential information you expect to disclose.
- Is it mainly commercial (prices, margins, suppliers)?
- Is it technical (code, designs, specs)?
- Is it customer-related (lists, behavioural data)?
- Is it financial (bank statements, revenue breakdowns)?
This helps you draft a definition that is specific enough to be enforceable, without accidentally protecting nothing (or trying to protect everything).
Step 2: Be Clear On The Permitted Purpose (And Keep It Narrow)
One of the most common mistakes we see is a Purpose that’s too broad, like “business discussions.”
A narrow Purpose makes it easier to show a breach if the recipient uses the information for something else, such as approaching your suppliers, targeting your customers, or building a competing offering.
Step 3: Decide Whether You Need One-Way Or Mutual Confidentiality
Some relationships are one-way (you disclose, they receive). Others are mutual (both sides disclose information).
If both parties will share sensitive information, a mutual structure can be more practical - but it needs to be drafted carefully so your key protections aren’t watered down.
Ask yourself:
- Will the recipient need to share information with staff or contractors?
- Will confidential information be stored in shared drives or project tools?
- Are there minimum security standards you want them to meet?
- Should information be marked “Confidential” in writing?
The strongest deed is one that matches how you actually work.
Step 5: Make It Consistent With Your Other Legal Documents
Confidentiality often overlaps with other key legal areas, including:
- IP ownership: who owns what is created during the project
- employment and contractor terms: confidentiality, restraint (where appropriate), return of company property
- customer-facing terms: privacy and data handling
For example, if your business is also locking in brand protection and ownership arrangements, you might also need foundational documents like a Company Constitution (for companies), or agreements that govern decision-making and ownership between founders (depending on your structure and growth plans).
Step 6: Get Signing And Execution Right
Even a well-written deed can cause headaches if it’s not signed correctly.
Practical points to consider include:
- Make sure the correct legal entity is signing (individual vs company trustee vs company).
- Check whether the other party is signing as an individual or a company (and who has authority).
- Keep a clean, dated copy of the fully signed deed.
If you’re dealing with a company, execution rules can matter. For example, some companies execute documents under section 127 of the Corporations Act 2001 (Cth), and there can also be different practical requirements depending on whether someone signs as a sole director/secretary, under a power of attorney, or in another capacity. Getting the signing details right upfront can save you a lot of stress if you ever need to rely on the deed later.
Step 7: Don’t Forget The Commercial Side (Trust, Process, Access Controls)
A deed of confidentiality is a legal safety net - but it’s not your only protection.
Also consider operational safeguards, like:
- only disclosing what you need to disclose (staged disclosure)
- limiting access to a small group
- using password-protected data rooms
- keeping version control and audit trails
Legal protection + sensible processes is usually the strongest combination.
Key Takeaways
- A deed of confidentiality helps protect valuable business information by setting clear rules on how it can be used, shared, and safeguarded.
- You’ll often need a deed of confidentiality when you’re sharing sensitive information with contractors, suppliers, partners, investors, or potential buyers.
- While NDAs and confidentiality clauses can also work, a deed can be particularly useful for early-stage discussions where there may not be clear “consideration”.
- A strong deed should clearly define confidential information, set a narrow permitted purpose, cover return/destruction, and include practical enforcement options.
- Confidentiality often overlaps with other legal needs (employment terms, contractor terms, privacy compliance), so your documents should work together rather than contradict each other.
Note: This article is general information only and doesn’t take into account your specific circumstances. If you’re unsure what document you need (or how to structure the confidentiality terms for a particular deal), it’s best to get legal advice.
If you’d like help putting a deed of confidentiality in place (or tailoring one to your specific deal or relationship), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
