A Residuals Clause is a contract provision (often in NDAs or services agreements) stating that the recipient may use information retained in unaided memory, provided they do not intentionally memorize or use confidential materials, which can limit confidentiality protections. In commercial and M&A contexts, a Residuals Clause is controversial because it can weaken trade secret protection, and Residuals Clause scope (who it applies to, what information, and time limits) is heavily negotiated.
