When there is a disclosure or potential disclosure of confidential information at the beginning of a business relationship or if discussions discontinue, a confidentiality agreement sets reasonable boundaries for behavior. As such, putting an agreement in place should be viewed as a significant and necessary activity and should be treated accordingly. Q What is a confidentiality agreement? A A confidentiality agreement, also called a non-disclosure agreement (NDA) or secrecy agreement, is a legal contract between two (or more) parties stating that they will not share or profit from confidential information. This type of agreement may be useful in many different situations such as when a company has confidential and proprietary information, or even trade secrets, where the value is maintained by their secrecy, or in the case of a business merger, material R&D, vendor sourcing, a potential investor, or a joint venture between companies. While all agreements should be tailored to the specific needs of the parties involved, there are some typical components that should be included in any confidentiality agreement or confidentiality clause: • Identification of the parties who have access to the confidential information; • An outline of the confidential information included in the agreement; • Exclusions to the confidential information; • How long the information should remain confidential; • Examples of appropriate and inappropriate uses of the confidential information; • What to do in case of a breach by a party receiving the confidential information.
Confidentiality agreements are important business tools and are often precursors to further agreements and business relationships. For most businesses, their intellectual property is their most valuable asset, and must be protected. CONFIDENTIALITY AGREEMENTS
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