💡 Plain English Explanation

This clause specifies what must happen to confidential materials when the NDA ends or the business relationship concludes. Options typically include returning all materials to the disclosing party, destroying them, or some combination. Many clauses also require written certification that destruction has been completed.

In the digital age, this clause has become more complex. How do you "return" an email? What about backup tapes? Cloud storage? The clause needs to address these practical realities while still providing meaningful protection.

⚠ Why It Matters

For the Disclosing Party: You want your confidential information back or confirmed destroyed. Without this clause, the receiving party could retain copies indefinitely, increasing the risk of future leaks.

For the Receiving Party: Strict return/destruction requirements can be burdensome and technically challenging. Modern IT systems make complete destruction nearly impossible - backup systems, email archives, and disaster recovery copies may exist in places you can't easily access.

Practical Reality: Most companies can't guarantee complete destruction due to automated backup systems, legal hold requirements, and regulatory retention obligations.

🚩 Risk Factors

📄 Clause Versions

Balanced Version: Practical approach allowing destruction or return, with reasonable exceptions for backup systems and legal requirements. 
Upon the earlier of (i) termination or expiration of this Agreement, (ii) completion of the Purpose, or (iii) written request by the Disclosing Party, the Receiving Party shall promptly, at the Disclosing Party's option:

(a) Return to the Disclosing Party all tangible materials containing Confidential Information; or

(b) Destroy all tangible and electronic materials containing Confidential Information and provide written certification of such destruction signed by an authorized officer.

Notwithstanding the foregoing, the Receiving Party may retain:
(i) One archival copy of Confidential Information solely for legal compliance and dispute resolution purposes, which shall remain subject to the confidentiality obligations herein;
(ii) Copies of Confidential Information that exist in automated backup or disaster recovery systems, provided the Receiving Party continues to protect such information in accordance with this Agreement until it is destroyed in the ordinary course; and
(iii) Materials required to be retained by applicable law, regulation, or professional standards.

The obligations of confidentiality shall survive any return or destruction of Confidential Information.
Disclosing Party Favor: Strict return/destruction requirements, detailed certification, and verification rights. 
Upon the earlier of (i) termination or expiration of this Agreement, (ii) completion of the Purpose, or (iii) written request by the Disclosing Party (which may be made at any time and for any reason), the Receiving Party shall, within ten (10) business days:

(a) Return to the Disclosing Party all originals and copies of any and all documents, materials, and media containing Confidential Information in the Receiving Party's possession, custody, or control, including all notes, analyses, compilations, studies, interpretations, or other materials prepared by the Receiving Party that contain or are based on Confidential Information;

(b) Permanently delete and destroy all electronic copies of Confidential Information from all computer systems, storage devices, and cloud services, using industry-standard secure deletion methods;

(c) Provide a written certification signed by an authorized officer of the Receiving Party confirming that all Confidential Information has been returned or destroyed as required herein; and

(d) Upon request, permit the Disclosing Party or its designee to conduct a reasonable inspection to verify compliance with this section.

The Receiving Party shall not retain any copies, extracts, or other reproductions of Confidential Information. The obligations of confidentiality shall survive any return or destruction and shall continue in full force and effect indefinitely.
Receiving Party Favor: Maximum flexibility, broad retention exceptions, and practical acknowledgment of modern IT realities. 
Upon written request by the Disclosing Party following termination or expiration of this Agreement, the Receiving Party shall use commercially reasonable efforts to return or destroy Confidential Information; provided, however, that:

(a) The Receiving Party may retain Confidential Information (i) as required by law, regulation, or professional standards, (ii) in automated backup, archival, or disaster recovery systems, (iii) in email systems and archives where deletion is impractical, or (iv) as necessary for legal compliance, internal audit, or dispute resolution purposes;

(b) Any Confidential Information retained pursuant to this section shall continue to be subject to the confidentiality obligations of this Agreement until such time as it is destroyed in the ordinary course of business;

(c) The Receiving Party shall not be required to destroy notes, analyses, or work product prepared by its personnel, provided that such materials shall remain subject to the confidentiality obligations herein;

(d) The Receiving Party may comply with this section by providing a certificate of a responsible officer confirming that, to such officer's knowledge after reasonable inquiry, the Receiving Party has complied with this section in good faith.

Neither party shall be liable for any breach of this section resulting from technical limitations, unforeseen circumstances, or inadvertent retention of Confidential Information.

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