From the Sifter Factory: How Long the Contract Lasts Versus How Long Obligations Last

Note: This post is one of an intermittent series of 'From the Sifter Factory' posts that explain the purpose of one or more Sifters and how you might want to use them.

Even if a contract provides for ongoing obligations, it might not make sense to specify a term for the contract—the period after which the contract comes to an end. If you do anyway, the result can be confusion.

Consider confidentiality agreements. Although plenty are given a term, that doesn’t express clearly what’s going on. Instead, it’s best to think in terms of two periods—the period during which information the parties disclose will be covered by the contract, and the period during which the recipient is prohibited from disclosing or using confidential information other than as contemplated in the contract.

Three Sifters look for these different concepts:

• Term: Duration

• Confidential Information: Disclosure Period

• Confidential Information: Duration of Obligation Not to Disclose

But that’s not the whole story. In addressing duration of the prohibition on disclosing or using confidential information, a contract might piggy-back off of a previous sentence that states the prohibition, so duration can be expressed concisely, as in That obligation lasts for three years from disclosure. Because that sentence doesn’t refer to confidential information, it wouldn’t be flagged by the Confidential Information: Duration of Obligation Not to Disclose Sifter. Instead, the language would be found by the Obligations: Duration Sifter.

A sentence that would be flagged by Confidential Information: Duration of Obligation Not to Disclose would also be flagged by Obligations: Duration, so you could elect to turn on only Obligations: Duration. But you might find useful the specific guidance offered by Confidential Information: Duration of Obligation Not to Disclose, so consider turning it on too, in addition to the other three.

Obligations: Duration is also of more general use, because it’s commonplace for contracts to refer to duration of an obligation that operates independently from the contract term. For example, a contract might refer to duration of a party’s obligation to indemnify.

Term: Duration and Obligations: Duration would both be relevant for purposes of contracts that provide for ongoing obligations. If you’d find it more convenient, you could use instead just Term and Obligations: Duration, which “rolls up” both those Sifters and searches for both concepts.

If you have any questions about this, please contact your LegalSifter representative.