How to have the strictest confidence in confidentiality agreements
1. What is a confidentiality agreement?
A confidentiality agreement is a legal agreement that sets out exactly how you can share information or ideas in confidence with another party.
Confidentiality agreements can also be known as non-disclosure agreements or NDAs.
2. When should I enter into a confidentiality agreement?
You should not assume that any business conversation you have is in confidence.
If you have an idea, new business process or trade secret and you need or want to share it with another party for investment, joint venture or any other commercial purpose, it is wise to enter into a confidentiality agreement to protect the information you are about to disclose. And always, always enter into that confidentiality agreement before you disclose any information.
3. How can I keep my information confidential?
The Golden Rule? Only ever disclose your information when absolutely necessary.
Confidential information holds commercial value for you and your business but it will only do so whilst it is confidential. Once information has been disclosed it can be used by others, which means it is unlikely to remain confidential and therefore unlikely to retain its value.
4. What should a confidentiality agreement cover?
A confidentiality agreement should set out exactly why you’re disclosing your information and exactly what information you want to be covered.
The agreement should also clearly state what you expect of the person or party you are disclosing your information to, for example:
- What they are and are not permitted to do with the confidential information they receive
- What they must do with it if the agreement expires or is terminated
- What they must do to keep your information and ideas secure
5. Are there different types of confidentiality agreement?
Yes. You can enter into a ‘mutual’ confidentiality agreement or a ‘one-way’ confidentiality agreement.
If both parties in the discussion intend to disclose confidential information, a mutual agreement that places obligations on both parties would probably be most appropriate.
However, if only one party needs to disclose information a one-way agreement may be more appropriate.
6. Can I disclose information at a meeting before the other party signs my confidentiality agreement?
No, it is not advisable to disclose any ideas or confidential information until the other party has signed and returned the confidentiality agreement to you.
Without an agreement in place, you are running the risk that the other party could use your ideas or information without your permission. Once they have your information in their possession, it would be extremely difficult to stop them from using it for their own purposes without your consent.
For advice on entering into an NDA or assistance with putting together an appropriate confidentiality agreement, consult a legal adviser with a sound track record in the field.