A confidentiality agreement, or a non-disclosure agreement, is a contract which relates to the mutual or one-way disclosure of potentially confidential information. Any business who has concerns regarding the unauthorised disclosure of its sensitive or valuable information can benefit from having a professionally drawn up non-disclosure agreement.
It can be easy to trust in the people that you share your confidential information with will not disclose this information without your consent, however there are often parties who would abuse the trust and information that they are given. The sensitive information of a business can often be valuable to competitors. It is for this reason that it is vital to have a non-disclosure agreement in place before any confidential information is shared.
Non-disclosure agreements are especially important if you are involved in developing a new product or potentially patentable invention. Without a non-disclosure agreement in place it may be difficult to get a patent for the invention, if one has not already been filed.
How do non-disclosure agreements work?
Non-disclosure agreements are contracts that dictate what can and cannot be done with the confidential information disclosed by one party to another. Non-disclosure agreements most often cover how far a party may disclose information within its organisation, the purpose of the disclosure of information, the period during which the information may be used, how the information is to be stored, dealt with upon termination and what happens in the event of a breach of the agreement.
How will my agreement be drafted?
The type and style of the agreement will depend on the kind of information that is being shared. If a small amount of confidential information is being shared face-to-face, a short agreement in letter form may be appropriate. For the disclosure of sensitive documents or more sensitive information is revealed then a more complex non-disclosure agreement may be drafted. Ready-made agreements are not recommended as they are not tailored to your specific needs and may not provide the level of protection that is required.
What can happen without a non-disclosure agreement?
Disclosure of your sensitive information can prevent potential patent ability, as discussed above, but it can also mean that competitors can gain from information that they learn about your product or business financially. Your reputation may also be at risk if it becomes known that information that is supposed to be kept confidential has been disclosed.
What can happen is a party breaches the agreement?
One of the major benefits of having a non-disclosure agreement is that you can sue if a party breaches the terms of the agreement. This acts as a deterrent and means that remedy for the breach can be gained without difficulty. Without an agreement, it would be one party’s word against yours as to the intent behind the disclosure. The agreement should also specify what damages can be claimed and set entitlement to alternative relief such as an injunction.