Confidentiality and Non-Disclosure Agreements

To remove as much doubt as possible from any situation requiring the disclosure of sensitive commercial and technical information, a Confidentiality and Non-disclosure Agreement should be signed by all employees, independent contractors and business associates before receiving confidential information. Alternatively, a confidentiality and non-disclosure clauses could and perhaps should be inserted into any formal agreements with these parties such as employment contracts, consultancy agreements, service agreements, etc.

The principal terms of any form of Confidentiality and Non-Disclosure Agreement should include:

  • Definition of confidential information
  • Obligations of the recipient
  • Use of confidential information
  • Return of confidential information
  • An Indemnity against loss suffered by the disclosing party if the information is subsequently disclosed by the recipient
  • Reservation of rights
  • Remedies for breach of agreement
  • Term and termination

The definition of confidential information should be broad enough to cover all protectable information that may be disclosed throughout the course of the business relationship, but not so broad as to make it ambiguous and/or unenforceable. If there are specific items of particular importance, they should be described in the agreement.

In addition to requiring the recipient of confidential information to agree not to disclose it publicly, it is very important to describe the purposes for which the confidential information will be used, the manner in which it will be used, the other persons (such as employees of an independent contractor) to whom the information may be disclosed and on what terms, and the efforts the recipient must make to maintain confidentiality.

The indemnification provision will require the recipient to pay damages for breach of the confidentiality provisions, and the reservation of rights and remedies provisions will state that the information provider will be entitled to equitable relief (e.g. an injunction) in the event of a threatened disclosure of confidential information.

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