Recipient Clauses in Contracts
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What is a recipient clause?
Recipient defines the party receiving confidential information and thus the party who has obligations of confidentiality. For example, in an NDA between a startup and a potential investor, the investor is the Recipient. The Recipient is the one who must safeguard the information, use it only for permitted purposes, and not disclose it to others. Without a clear definition, the confidentiality obligations may not stick to the right party.
Things to consider
- Agreements may define both parties as Recipients if information flows both ways.
- The agreement should clarify how Recipient’s employees, contractors, and affiliates may access the information.
- The Recipient’s obligations typically include restricting disclosure, limiting use, and protecting information with reasonable care.
Also known as: receiving party, data recipient, or information recipient
Example recipient language
Sample language from Common Paper Cloud Service Agreement
“Recipient” means a party to this Agreement when the party receives Confidential Information from the other party.
Recipient may disclose Discloser’s Confidential Information to Users, employees, advisors, contractors, and representatives who each have a need to know the Confidential Information, but only if the person or entity is bound by confidentiality obligations at least as protective as those in this Section 10 (Confidentiality) and Recipient remains responsible for everyone’s compliance with the terms of this Section 10 (Confidentiality).
Risks to watch for in recipient clauses
| ⚠️ Risk Type | Description |
|---|---|
| 🧑🤝🧑 Third-Party Sharing | If not spelled out, the Recipient may share information with affiliates or contractors without limits. |
| ⚖️ Negotiation Pushback | Investors and large enterprises often push back on being defined as Recipients in all contexts. |
| 🔀 Ambiguity on Roles | If not defined clearly, both parties may disagree about who owes confidentiality duties. |
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