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Frequently Asked Questions

What is a Residuals Clause and how does it affect the definition of confidential information?

A Residuals Clause is a provision in a Non-Disclosure Agreement (NDA) that creates an exception to the definition of confidential information. This clause allows for information that is retained in a person's memory to be excluded from the definition of confidential information. This means that any information that the receiving party remembers, without the aid of notes or summaries, is not considered confidential. This clause can be seen as an aggressive stance by the receiving party and is often scrutinized by the disclosing party. The Residuals Clause can significantly affect the definition of confidential information in an NDA. It allows the receiving party to use the information they remember, even if it was initially classified as confidential. This can potentially lead to the disclosure of sensitive information, which could be detrimental to the disclosing party. However, to mitigate this risk, the NDA can be tailored to require the destruction of all notes and summaries made by the receiving party. This ensures that the receiving party cannot rely on written materials to recall the confidential information, thereby limiting the impact of the Residuals Clause.
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