A confidentiality or nondisclosure agreement is necessary at times to protect an inventor, business owner, or any other party that has confidential information.
These agreements can be simple forms, or complex, detailed agreements depending on the importance and magnitude of the confidential information.
Legal documents for confidentiality and nondisclosure are commonplace due to the nature of business.
Confidential information often needs to be disclosed, but this information should also remain classified if necessary. A confidentiality or nondisclosure agreement allows a business or entrepreneur to share information with clients, employees, or any other third party with confidence that the information will remain protected and classified.
Key Elements of a Confidentiality or Nondisclosure Agreement
Definition of Confidential Information
The contract should detail the scope of the information that will be disclosed without giving away any of the confidential information specifically within the agreement.
Purpose of Disclosure
The contract should outline the purpose for keeping the information classified.
The contract should state that the person(s) receiving the confidential information may not disclose this information to any other party. The specific previsions involving nondisclosure vary greatly among contracts.
The contract should include a provision stating that the recipient of the classified information cannot use the information gained for any other use than what is stated in the contract.
The contract will most likely include some limits about the confidential information and what is deemed classified. Some information can be publicly known, disclosed by the government, or independently gained and will be excluded from being deemed confidential.
The contract will set forth the term of the confidentiality agreement, which should be long enough to protect the interests of the party disclosing the information. While some terms are as short as one year, others last an indefinite amount of time.
When to Use a Confidentiality or Nondisclosure Agreemen
Confidentiality and nondisclosure agreements are used in many business relationships. Two types of agreements exist to protect the interests of the business owner or entrepreneur.
A unilateral agreement is an agreement in which one party requests another party to keep information classified. A mutual agreement is an agreement in which both parties agree to keep information classified.
It’s common to use a confidentiality or nondisclosure agreement when a business owner or entrepreneur is soliciting investors for a new product, service, or business idea.
Other times to use a confidentiality or nondisclosure agreement would be when a business owner or inventor is negotiating with a potential buyer, or when a contractor or employee will have access to information that could be financially detrimental if it is disclosed either while being employed or after employment has ceased.
Confidentiality agreements are normally written documents that are dated and signed by both parties in order to protect both parties in the case of future disputes. In cases where agreements are finely drafted and terms need to be specific and detailed, it may be in a company’s best interest to hire an attorney that specializes in confidentiality and nondisclosure agreements to review the agreement.