Contract Law - Confidentiality Agreements (Contracts)
Employees owe an implied duty of good faith to their employers which may include an obligation of confidence1.
Where the duty is made express, most often by being contained in a contract of employment, the employer must take care to define clearly the scope of the confidential information2. It is essential for the employer especially to distinguish knowledge of his goodwill and trade secrets, which can be protected as confidential, from the employee's personal skills, experience and knowledge, which can't be subject to restraint3. accordingly, 'know-how' that amounts to knowledge of scientific and industrial processes may be protected if it meets the general requirements of restricted availability and definite character which will enable it to be treated as a trade secret4. On the other hand, an employee is entitled to use and to put at the disposal of new employers all his 'know-how', in terms of his acquired skill and knowledge, regardless of where he acquired it and regardless of whether it was secret at the time he acquired it, so long as it can no longer be protected as confidential to his former employer5. Knowledge of the reasonable mode of general organisation and management of a business may not be a trade secret6.
The employee's obligation of confidence may continue after the employment has terminated7, and in order to protect trade secrets or goodwill8 the employer can rely on an express term of a contract to restrain trade, provided that the term is no more widely drafted than is necessary or reasonable9. When contractual obligations of confidence take the form of terms in restraint of trade in contracts of employment they are subject to the rules of public policy governing such terms10. The employer can secure fuller protection whilst the employment subsists than after it terminates11, when the terms must be no wider than is reasonably necessary to protect the employer's goodwill and trade secrets12. The terms must not purport to prevent the former employee using his acquired skills and knowledge when to do so would not prejudice the goodwill or trade secrets13. Matters covered by a term in restraint of trade may also be covered by implied obligations in the contract of employment14. If an express term is narrower than these implied obligations this will not of itself prevent effect being given to the wider implied obligation15.
An employer may also owe obligations of confidence to an employee16.
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