Signing a confidentiality agreement is a common practice in the business world.
In the world of business, information is power. With the right information, trade secrets can be revealed and customer privacy can be compromised. Many companies go to extreme lengths to secure their information, often employing confidentiality agreements. These agreements are tailored to protect sensitive information that could be detrimental in the wrong hands.
Party Identification
The first part of a confidentiality agreement is a description of the parties involved. In agreements where one party is providing confidential information, the disclosing party is identified as such and the other is identified as the recipient. Affiliated companies, partners and agents of the recipient are generally required to sign a separate agreement or become part of the initial agreement if they are going to be receiving confidential information.
Description of Confidential Information
Both parties have a vested interest in a clear definition of what is confidential. The disclosing party usually wants a broad definition to prevent the recipient from using any loopholes in the agreement. Conversely, the recipient will want confidential information clearly identified and the allowable uses of that information defined.
Exceptions to Non-Disclosure
There are circumstances where disclosure on the recipient's part does not constitute a breach of the agreement. That occurs when the confidential information is made public by someone other than the recipient. It also occurs if the information is provided in a nonconfidential manner or was provided when the information was deemed non-confidential before the contract was signed. The last exception is if the recipient is compelled by law to provide the information, although he is required to alert his employer before disclosing the information.
Term of Agreement
Another important element of confidentiality agreements is the length of time that the recipient must keep the information confidential. Some companies require indefinite confidentiality but most simply use a set number of years after termination for confidentiality to be maintained. This varies depending on the nature of the work and the agreement.
Disclosure Consequences
Many confidentiality agreements also spell out the consequences of a non-exempt disclosure. This almost always includes termination if the recipient is still an employee. Whether he's still an employee, he might face legal action for breach of the confidentiality agreement. This is not limited to intentional disclosure. A broadly enough defined agreement can have consequences for disclosures caused by a lack of due care when handling confidential materials. Recipients are encouraged to take whatever steps are necessary to secure confidential information.
Additional Provisions
Other provisions commonly involved in confidentiality agreements deal with the return of company property after termination, protection of any confidential information previous employers entrusted to the recipient, what jurisdiction's governing laws will be applied in a dispute, and rights to injunction in the case of a breach of agreement.
