Common Interest Agreements in NZ: Confidentiality and Privilege

Common interest agreements can be useful when two or more businesses need to share sensitive information for a common legal or commercial purpose, but they are also easy to get wrong. Founders often assume a standard NDA is enough, rely on a verbal understanding about confidentiality, or share documents too broadly before the paperwork is settled. Another common mistake is treating a common interest arrangement as a blanket protection for every conversation, when in practice the scope matters a lot.

If your business is collaborating on a dispute, regulatory issue, transaction, investigation, or joint strategy, you need to be clear about what a common interest agreement actually does, what it does not do, and how it should fit with your other contracts. This guide explains how common interest agreements work in a New Zealand business context, the legal issues to check before you sign, and the mistakes that most often create risk.

Overview

A common interest agreement is usually used where parties want to share legally sensitive information while preserving confidentiality and, where available, protecting legal privilege in a shared matter. It is most relevant when businesses are aligned on a specific legal issue, not simply because they are commercially friendly or working together generally.

• Define the shared legal or commercial interest clearly and narrowly.
• Confirm who is allowed to receive the information, including lawyers, directors, staff and advisers.
• Set out what information is covered and how it can be used.
• Address confidentiality, privilege, document handling and return or destruction obligations.
• Check how the agreement interacts with your NDA, supply contract, joint venture terms or settlement discussions.
• Make sure the arrangement does not create unintended competition law, disclosure or conflict issues.

What Common Interest Agreements Means For New Zealand Businesses

A common interest agreement is not a general business friendship clause. It is a targeted agreement used when parties share a genuine common interest in a legal, regulatory or strategically sensitive matter and need to exchange information on that basis.

In a practical New Zealand SME setting, that might happen where:

• a supplier and distributor are responding to the same product complaint or regulatory query,
• co-defendants are coordinating their approach to a claim,
• parties to a transaction are sharing advice and due diligence material through their legal teams,
• landlord and tenant are aligned in dealing with a third party dispute affecting the premises,
• group companies are coordinating a response to an investigation or threatened action.

The main purpose is usually twofold. First, it creates contractual confidentiality obligations around sensitive material. Second, it helps support the parties' position that information shared within the common interest arrangement should not lose any privilege that may attach to it.

That second point is where business owners often get caught. Legal privilege is a technical area. A contract cannot simply declare that every document is privileged and make it so. Whether privilege applies depends on the nature of the communication, who it was created by, why it was created, and how it is used and disclosed. A common interest agreement can help structure the sharing, but it is not a substitute for getting legal advice on privilege itself.

When is a common interest agreement actually useful?

It is most useful before you sign a contract for collaboration on a sensitive issue, before you accept the provider's standard terms for data sharing, or before you rely on a verbal promise that information will stay confidential.

For example, imagine two businesses are facing allegations about the same supply chain problem. One has external lawyers investigating quality control failures, while the other has technical reports and internal correspondence that may help both parties understand the issue. If they need to exchange material to coordinate a response, a common interest agreement may help set the rules around that exchange.

Another example is a merger or acquisition where parties need to discuss a specific legal risk that could affect the transaction. A standard NDA may cover confidentiality generally, but it may not deal properly with privilege, limited circulation, and legal team controls. A common interest agreement can address those points more directly.

How is it different from a non-disclosure agreement?

An NDA focuses on confidentiality. A common interest agreement usually goes further by identifying a shared interest in a particular matter and setting out a framework for exchanging sensitive or potentially privileged information in connection with that matter.

That said, there is overlap. In many deals, disputes and strategic projects, businesses use both. The NDA covers broader confidential information, while the common interest agreement addresses the specific legal context and tighter information-sharing rules.

If your arrangement is purely commercial, with no real shared legal interest, an NDA and well-drafted contract clauses may be the better fit. Trying to force a common interest label onto an ordinary commercial relationship can create false comfort and messy drafting.

Does New Zealand law recognise these arrangements?

New Zealand law recognises confidentiality obligations and legal privilege, but whether privilege is preserved in a shared arrangement depends on the facts, not just the label on the document. That is why the agreement should be drafted carefully and paired with disciplined conduct.

The document should match what the parties are actually doing. If staff circulate legal advice widely, mix privileged material with business commentary, or share documents outside the defined group, the protection you hoped for may weaken quickly.

Legal Issues To Check Before You Sign

Before you sign a common interest agreement, the key question is whether the parties truly share a defined interest that justifies controlled information sharing. If the answer is vague, the drafting is likely to be vague too, and that is where risk starts.

1. What is the common interest?

The agreement should describe the relevant matter with enough precision that everyone knows what is in and what is out. A phrase like “matters of mutual concern” is usually too broad on its own.

You should identify:

• the project, dispute, transaction, investigation or issue in question,
• the parties' shared objective,
• the categories of information expected to be exchanged,
• any limits on use outside that matter.

This is especially important where the businesses also have separate commercial negotiations going on. You do not want one side later arguing that it could use shared material for pricing leverage, contract renewal negotiations, or other unrelated purposes.

2. Who can receive the information?

Access rights should be tight. A common interest agreement usually works best when the recipient group is narrow and named by role.

Common permitted recipients include:

• external lawyers,
• in-house counsel, if relevant,
• directors and senior managers directly involved in the matter,
• expert advisers, consultants or insurers where necessary,
• staff who genuinely need the information to assist on the issue.

If your business is small, this may still be only two or three people. Wide internal circulation is a common source of trouble. Before you share anything, decide who holds the documents, who can copy them, and who can brief others.

3. Is the agreement dealing with confidentiality properly?

Even where privilege may exist, confidentiality terms still matter. The agreement should say how information must be stored, whether copies are permitted, what happens if disclosure is legally required, and when materials must be returned or destroyed.

Look for clauses covering:

• use restrictions,
• security and storage requirements,
• notice obligations if compulsory disclosure is requested,
• document retention periods,
• return, deletion or destruction processes at the end of the matter.

If your business uses shared drives, messaging apps or project management platforms, make sure the legal terms match your actual systems. A beautifully drafted agreement is not much help if the files end up in a general team folder.

4. Does the agreement say too much about privilege?

The right approach is careful drafting, not overclaiming. If a clause says every exchanged document is privileged regardless of its source or purpose, that is a red flag.

A better agreement will acknowledge that parties intend to preserve any applicable privilege and will handle materials consistently with that intention. It should not pretend that privilege can be created by wishful drafting alone.

This is one of those moments where founders should pause before they accept the provider's standard terms. If the document contains absolute statements about privilege, ask for a contract review.

5. How does it interact with your other contracts?

A common interest agreement should not sit in isolation. It needs to fit with any NDA, supply agreement, shareholders agreement, joint venture terms, engagement letter, insurance policy, deed of settlement, or court process that also touches the matter.

Check for inconsistencies on:

• definitions of confidential information,
• permitted disclosures,
• ownership of documents and work product,
• dispute resolution processes,
• termination rights,
• governing law and jurisdiction.

If two contracts say different things about who can receive legal advice or whether experts can be briefed, you may not know which rule to follow when pressure is on.

6. Could competition or conflict issues arise?

Sharing information with another business always needs care if the parties compete, even partly. The main risk is that a useful confidentiality arrangement becomes a pathway for sharing commercially sensitive information that should not be exchanged.

Particular caution is needed if the information includes:

• future pricing intentions,
• customer-specific strategy,
• tender plans,
• margin data unrelated to the shared issue,
• market allocation discussions.

If the businesses are not fully aligned, conflict issues also matter. A common interest can exist for one matter and disappear later. The agreement should deal with what happens if interests diverge, if one party settles separately, or if a dispute arises between the parties themselves.

7. What happens when the arrangement ends?

Exit mechanics should be practical and clear. The agreement should explain when it terminates, whether obligations continue, and what must happen to documents and copies.

You may also need to address whether lawyers can keep archival records, whether insurers can retain documents for compliance reasons, and whether any information can still be used once the common issue has finished. Those details matter most when relationships sour.

Common Mistakes With Common Interest Agreements

The biggest mistake is using a common interest agreement as a shortcut instead of a carefully defined tool. Businesses often sign one because it sounds protective, without checking whether the facts actually support it.

Assuming there is a common interest when there is only a shared commercial goal

Two businesses might both want a deal to proceed, but that alone does not mean they have the kind of aligned legal interest that justifies a common interest framework. If the parties are mainly negotiating against each other, the arrangement may be the wrong fit.

This often happens in investment rounds, acquisitions and supply negotiations. One side wants access to legal analysis, but the interests are not truly shared. A tighter NDA, cleaner due diligence protocol, or separate adviser-to-adviser process may be safer.

Using vague drafting

Broad language creates false confidence. Terms like “all information shared between the parties” or “any matter related to the business relationship” are hard to manage and easier to challenge later.

Narrow drafting is usually stronger. A defined issue, a defined group of recipients and a defined permitted use make the arrangement easier to follow in practice.

Circulating material too widely

This is where founders often get caught. Someone forwards legal advice to a wider operations team for convenience, adds commercial commentary in the same email chain, or stores the files in a general project folder. Even if the original arrangement was sensible, poor handling can undermine the protection you hoped to preserve.

Before you rely on a verbal promise that “everyone knows this is confidential”, decide on an internal rule set. Who can open the file? Who can print it? Who can summarise it verbally? Can it be sent to offshore support teams or contractors? Those decisions should be made early.

Forgetting about compulsory disclosure and public process risks

Some business owners assume that once a common interest agreement is signed, disclosure risk disappears. It does not. Court processes, regulatory requests, insurance demands and contractual audit rights can all create pressure to disclose documents.

Your agreement should set out what happens if a party receives a request for disclosure, including notice, cooperation, and efforts to protect the material where possible. It cannot remove legal obligations, but it can improve the response process.

Not aligning the agreement with actual business operations

A legal document only works if staff can follow it. If your business uses cloud tools, outsourced admin support, multiple entities, or external consultants, the agreement should reflect that reality.

Common operational points to check include:

• whether the sharing will happen by email, data room or portal,
• which entity in the group is actually a party,
• whether external experts need to sign separate confidentiality undertakings,
• how version control will be managed,
• who is responsible for deletion at the end.

Small businesses often move fast and keep records informally. That is fine until a sensitive matter arises. Then the lack of process becomes the legal risk.

Relying on a template without checking New Zealand context

Many templates come from overseas transactions or litigation practice and use legal concepts, disclosure assumptions or court terminology that do not map neatly onto your New Zealand arrangement. The wording may also clash with your existing contracts or governance documents.

For example, if your business operates through a New Zealand company but the contract names the trading division, or if your board approvals do not line up with the signatory block, the agreement may create uncertainty before the real issue even starts.

FAQs

Is a common interest agreement the same as an NDA?

No. An NDA is mainly about confidentiality. A common interest agreement usually deals with confidentiality as well, but is designed for parties sharing information because they have a specific common interest in a legal or strategically sensitive matter.

Can a common interest agreement make a document legally privileged?

Not by itself. Privilege depends on the nature and purpose of the communication and how it is handled. The agreement can support careful sharing, but it cannot automatically turn ordinary business documents into privileged material.

When should a small business use one?

Usually before you sign where the business needs to exchange sensitive legal material with another party on a defined issue, such as a dispute, investigation, transaction risk or coordinated response. If the issue is only general confidentiality, an NDA may be enough.

Can we use a common interest agreement with another business we also negotiate against?

Sometimes, but caution is needed. If the parties' interests are mixed or may diverge quickly, the agreement should be tightly limited and drafted with clear boundaries. Competition and conflict risks need close attention.

What should we do before sharing documents?

Confirm the scope of the shared issue, identify who can receive material, label and store documents carefully, and check how the agreement fits with your existing contracts and legal advice. Do this before you send the first email, not after.

Key Takeaways

• Common interest agreements are specialised tools for sharing sensitive information where parties have a real shared interest in a particular matter.
• They are not a replacement for an NDA, and they do not automatically create legal privilege.
• The strongest agreements define the shared issue, the permitted recipients, the allowed use of information, and the handling rules clearly.
• Businesses should check consistency with related contracts, practical document controls, disclosure risks, competition issues and what happens if interests later diverge.
• Before you sign, get the drafting matched to the real commercial situation rather than relying on a broad template or a verbal understanding.

If you want help with confidentiality clauses, privilege-related drafting, related contract alignment, and information-sharing controls, you can reach us on 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.