This clause lets you share confidential information with your parent company, subsidiary companies, or sister companies (your "affiliates"). It's high-risk because affiliates are separate legal entities—sharing with them is not the same as sharing within your own organization, and they may have different interests or security standards than you do. In the US, courts have found that companies cannot simply assume affiliates will keep secrets; the clause must be explicit. If your affiliate competes with the other party, or has weak data security, this clause could expose sensitive information to people who shouldn't see it.
Negotiate to limit affiliate access to only those affiliates who genuinely need the information to help you perform the contract, and require those affiliates to sign written confidentiality agreements with the same protections. Push back if the other party wants to share with "any current or future affiliate"—that's too broad and uncontrollable. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause lets you share confidential information with your parent company, subsidiary companies, or sister companies (your "affiliates").
Why should I care about this clause?
It's high-risk because affiliates are separate legal entities—sharing with them is not the same as sharing within your own organization, and they may have different interests or security standards than you do.
What are my options?
In the US, courts have found that companies cannot simply assume affiliates will keep secrets; the clause must be explicit.
How does this affect small businesses?
If your affiliate competes with the other party, or has weak data security, this clause could expose sensitive information to people who shouldn't see it.