Confidentiality agreements

Confidentiality Agreements

Confidentiality agreements (also called nondisclosure agreements, confidential disclosure agreements, and secrecy agreements) govern the disclosure of information which is of confidential nature.

Information and data are now intrinsically important for almost all businesses and intellectual property is highly valuable. For a small business which has developed some an excellent product, an idea or has a valuable client base or business model, that business certainly shouldn’t share information with a competitor or bigger business which may be an investor, a client or a supplier without adequate safeguards in place.

As with all legal contracts, some clauses are standard, but some are not, and it is always danagerous simply to download either a very basic form of confidentiality agreement from the internet or to use an all encompassing lengthy, “belt and braces” document. This can create embarassment and in fact increase costs because the counterpart may instruct lawyers who will significantly amend your standard document. It is also important to be aware that great reliance is often placed in confidentiality agreements on lengthy fixed terms for keeping information confidential and on liquidated damages (penalty clauses) for breach. these clauses may not be enforceable and always should be drafted carefully and proportionately for the transaction in question.

Confidential information can include trade secrets, valuable know-how, product information and details of customer and clients. A confidentiality agreement can either be a separate agreement or be included in another agreement. Some common standard provisions found in a Confidential Agreement include:

  1. Disclosing Party – this does not necessarily have to be the party who owns the information which is of a confidential nature.
  2. Limitations on the disclosure of confidential information – the information defined as confidential cannot be disclosed or shared to any person who is not a party to the agreement unless there is a specific exception to this.
  3. Exception to disclose confidential information – there are usually exceptions to when a receiving party can disclose the confidential information. These include:
    1. Information which was already in the public domain;
    2. Information which has already been known to the other receiving party;
    3. Information which was developed or discovered by the receiving party without disclosing the confidential information.
    4. Information which is required to be disclosed to comply with laws and/or regulations or required by court order.

Confidential information may be the first step to develop trust and confidence when starting a new business relationship. It enables all parties, and those working within their organisation, who have access to information which is confidential, of the obligations to keep such information confidential.

  • Callback

  • Archives