Confidentiality Agreements

All About The Confidentiality Agreement

What is a Confidentiality Agreement?

A confidentiality agreement template is a legally binding agreement meant to ensure that information, which a company may deem private or confidential, is not released to other parties or the general public. It can bind one or more parties not to disclose the information. Confidentiality agreements are used mostly in the developed corporate sectors. They are used to hide negotiations, information, or other material that may harm any of the parties if released to the public.

In Which Cases Do You Need a Confidentiality Agreement?

It depends on the type of information that you are using. Still, suppose you require secrecy when working with your commercial partner. In that case, the chances are that you will at least think about getting either a Confidentiality Agreement or a Non Disclosure Agreement template. This will help you work either with your employers or third parties with sensitive information without the fear of it becoming publicly available. A great example is a restaurant with a secret recipe, the chef needs to know it to prepare the dish, but the restaurant wants it to remain confidential. A confidentiality agreement is a perfect solution so that both parties can work in conjunction with one another. With Business-in-a-Box, you will have access to an array of confidentiality agreement templates, including our customer confidentiality agreement template, mutual confidentiality agreement template, mutual non-disclosure agreement template and much more.

Confidentiality Agreement vs Non-Disclosure Agreement

Confidentiality agreements are usually confused with NDA agreements, and they typically are used interchangeably even in the most formal contexts. This is justified because they offer similar protection levels to the party that is the rightful owner of the information. Nevertheless, a Confidentiality Agreement and an NDA have a few key differences that we will list so that you can pick the best one for your business.

As you may infer, the practicality and the “traditional” use of one or other agreement depends on the context. First, one of the critical differences in the region that you are in. Businesspeople from the United States tend to use NDA agreements, while people from Europe, Canada, the UK, and Australia favour a confidentiality agreement template.

Another critical distinction is that usually, confidentiality agreements are more prevalent when the deal is bilateral or multilateral, while NDAs are usually binding to a single party. While both agreements can include tinding one party or more parties, we described the most common use when protecting confidential information.

Finally, one of the key differences is that people regularly utilize a confidentiality agreement for very sensitive information, such as a critical company secret, or negotiations that would affect stock prices, like mergers or acquisitions in progress.

Confidentiality Agreement Template Overview

Utilizing a confidential agreement is key to a prospering relationship with your employees or professional partners. It will allow the everyday use of logos, assets, or even intangibles like patents or copyrighted content.

Ensuring your material protection as a company is the main objective of the agreement and the intellectual property’s safe use. Here, you will find a general guide of what usually comprises a confidentiality agreement in the “How to write a Confidentiality Agreement” sections, as well as a brief explanation of each of its components.

What to Include in a Confidentiality Agreement

The most crucial characteristic of a proper confidentiality agreement template is establishing “confidential information” and a concise but clear explanation of what is expected when it comes to the terms and conditions of use. Since, for the most part, both parties will be conveying confidential information, it is in the best interest of you and your partner to go over this main point when discussing the extent of your association.

  • Identify both the disclosing and the receiving party.
  • What does each of the parties deem as sensitive information?
  • Scope, obligations and expectations set on the receiving party
  • Set a term for the agreement
How to Write a Confidentiality Agreement

Furthermore, we will go over the specific parts of a professional confidentiality agreement. However, before we can get there, we would like to take a moment to talk about the core parts of what makes this document special.

First, the purpose of a confidentiality agreement is strictly made for commercial use, to lend one part of your company to another to pursue a common interest. As such, and just like with any legally binding document, you should be very careful with the expectations and restrictions you set.

Confidentiality Agreement Template Sample:
1. Background

The background section is similar to the “definitions” in other legally binding documents, in which the parties are described by name, and the intentions of the agreement are identified.

Firstly, you should list the “disclosing party” and the “receiving party,” which means; the party that owns the information and the party that is being legally bound not to share it (in case of a unilateral agreement).

The type of information may also be briefly described here but will be furthered in detail in the contract’s following clauses. Nevertheless, one should seek to explain the nature of the information, be it a technological tool, a trade secret, etc.

2. Confidential Information

The confidential information section is relatively straightforward, as it seeks to define what the disclosing party defines as “Confidential Information.”

Besides defining the confidential information, the intended uses of the receiving parties’ confidential information are disclosed.

A part that is often disregarded when writing a confidentiality agreement is a section in this clause where the disclosing party states that if there is any reasonable doubt if a particular piece of information can be released to the public or to a specific external party, the receiving party should notify and receive written confirmation and approval from the disclosing party before going forward with the sharing of the information.

3. Protection of Confidential Information

Here, the receiving party confirms that it understands the importance of the confidential information remaining between the parties in the contract. It protects the disclosing party against the risk of the receiving party sharing the information for commercial purposes.

Furthermore, the receiving party confirms that it will not edit, modify, destroy, copy, or infringe in any way with any of the elements that pertain to the confidential information released. This last part is important because if this clause is missing, the receiving party may edit the data and then use it for purposes against the agreement’s intentions. This will stand in court because the new data is different from the original.

Luckily for new and well-established businesses worldwide, Business-In-a-Box has a number of legal templates, along with multiple confidentiality agreement templates that can help you achieve your legal groundwork in a fast and cost-efficient way.

4. Return of Information

This clause is an optional yet essential part of the agreement since it is where you, as the disclosing party, can set the need to return all information, documents, and files containing or made with confidential information when the term of the contract has reached the end. You can also specify whether you want these documents returned or destroyed.

5. Relationship

The contract’s present section is essential because it protects the disclosing party against misinterpretations of the connections that the receiving party has with you. Take, for example, the use of a confidentiality agreement for information shared in an employment interview. The receiving party (the employee in this case) states that the disclosing party’s relationship is precisely that: a potential employee.

Without this clause, ill-intentioned parties may say that this contract reflects a deeper relationship and causes you all sorts of legal issues.

6. Exclusions

To understand the scope of your agreement is essential, and as such, you should keep in mind the limitation on the receiving party’s side. In the “Exclusion” clause, you can detail if the recipient is exempt from any obligations due to unfairness or difficulty regarding the specific situations.

You will also set a precedent if the recipient is legally obliged to disclose the information due to a legal process. They should be allowed to if forced by court order and avoid breaching the present contract. Examples of standard exclusions include:

  • Information that is already known by the receiving party
  • Public information obtained through legal means
  • Information developed before the contract.
7. License of Use

The section of “License of Use” is crucial in any confidentiality agreement template. It is usually a relatively short clause, but it explicitly hands over the disclosing party’s permission to the receiving party to use the information. The key part is that the particular purposes for which the data can be used should be stated clearly. In doing so, the information will remain the disclosing party’s property and will be treated as such.

8. Counterparts

The counterpart clause states that multiple receivers will remain a cohesive unit, and no particular party receives any extra obligations or rights regarding the information unless the disclosing party explicitly agrees to do so in a separate written agreement.

9. Term

The term clause is straightforward; it states the duration for which the agreement lasts. This is usually until after the termination of this contract.

10. Assignment

In short, the assignment section states that the responsibilities set out in the contract are to be fulfilled by the receiving party and not delegated in any way, except explicitly stated otherwise. This will protect the disclosing party, preventing any contact with their trade secrets outside of the legally bound by the confidentiality agreement.

11. Severability

The contract’s severability clause is also quite short and straightforward, and it is general for not only confidentiality agreement templates, but most legally binding contracts should include one. What the severability clause does, is that it deems that every clause is a separate statement and that if a legal organism deems a particular section void, all of the remaining parts of the contract remain functional until they are deemed void.

This section is not difficult to implement, but due to its importance, it must be properly written and structured to ensure your legal security. Business-In-a-Box legal experts make sure that all your contracts and legal needs are entirely covered.

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