A confidentiality agreement is simply a contract between two or more parties where the subject of the agreement is a promise that information conveyed will be maintained in secrecy. Confidentiality Agreement, which is sometimes also referred to as a Non-Disclosure Agreement or NDA.
What Should I Include in a Confidentiality Agreement?
Here are some of the general sections in a confidentiality agreement form.
- Set the date of the agreement. It’s important to set the date when the agreement becomes effective.
- Describe the two parties, sometimes called the “Disclosing Party” and the “Receiving Party”. Include names and identification, so there can be no misunderstanding about who signed the agreement.
- State the reason for the agreement; for example, the Receiving Party is being hired by the Disclosing Party for a position with access to Confidential Information.
- Identify what company confidential information you want to include in the agreement. Describe the confidential information in detail.
Identification of The Parties
The parties to the agreement are usually a straightforward description set forth at the beginning of the contract. If it’s an agreement where only one side is providing confidential information. Then the disclosing party can be referred to as the disclosing party and the recipient of the information can simply be referred to as the recipient.
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The one tricky part here is to think about whether any other people or companies may also be a party to the agreement. Does the recipient expect to show the confidential information to a related or affiliated company? To a partner? To an agent? If so, the confidentiality agreement should also cover those third parties.
Definition of What Is Deemed to Be Confidential
A definition of confidential information should state what specific information or types of information are protected by the agreement. Spoken information may be difficult to deal with, but a common compromise is for the discloser to confirm in writing, shortly after the original disclosure, what information was given to the receiving party.
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If you’re the disclosing party, the definition of confidential information needs to be as broad as possible to make sure the other side doesn’t find a loophole and start using its valuable secrets. If you are the recipient of the information, you have a legitimate desire to make sure that the information that you are supposed to keep secret is clearly identified so that you know what you can and can’t use.
Scope of the Confidentiality Obligation
The core of the confidentiality agreement is a two-part obligation on the receiver of the information, to keep the confidential information in fact confidential and not use the confidential information itself.
The recipient of the confidential information has to keep it secret. And this usually means that the recipient has to take reasonable steps to not let others have access to it. After all, also the last thing you want is for them to take your great idea or mailing list and make a zillion dollars from it. If the scope of the NDA is broad enough, then you can sue for damages or to stop the recipients if they breach either their confidentiality obligations or their non-use agreement.
The Exclusions from Confidential Agreement
Every confidential agreement has certain exclusions from the obligations of the receiving party. These exclusions are intended to address situations where it would be unfair or too complicated for the other side to keep the information confidential.
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This could include information that was known prior to creating the agreement. Information about the disclosing party that the receiving party obtained through a third-party, public knowledge, information requested by the government, and information learned independently.
The common exclusions include information that is
- Already known to the recipient
- Already publicly known (as long as the recipient didn’t wrongfully release it to the public)
- Independently developed by the recipient without reference to or use of the confidential information of the disclosing party
- Disclosed to the recipient by some other party who has no duty of the confidentiality to the disclosing party
How Long Should The Confidentiality Agreement Last?
Time frame or term should include both the date that the agreement goes into effect and when it will expire. A confidentiality agreement may expire after a set term, after an event occurs or never. A typical timeframe would be two to five years, but the disclosure may want to say that even after the term ends, the disclosing party is not giving up any other rights that it may have under copyright, patent, or other intellectual property laws.
Jurisdiction in Case The Dispute Arises
If you are the disclosing party, you want to make sure that if there is any dispute as to whether the other side has lived up to its obligations, the dispute will be handled exclusively in your city. You don’t want to have to travel far away and incur additional costs to enforce your confidentiality agreement.
Add clause that gives you the right to injunctive relief to stop the other side from breaching the agreement. This clause simply says that you can get a court order stopping the other party from doing the breaching act. As opposed to just getting money damages after it’s too late.
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