Confidentiality agreements: a guide to keeping things under wraps

Every business, whether it’s a start-up or a multi-national conglomerate, generates ideas or presides over systems which, by necessity, have to be shared in confidence between employees or revealed to outside parties, such as manufacturers and contractors. But how do you protect against a disgruntled employee, or an unscrupulous consultant seeking to profit from the secrets you’ve bestowed upon them?

Confidentiality agreements, otherwise known as non-disclosure agreements, or NDAs, can help keep your vital information and data under wraps, preventing it from being used against you.

What is a confidentiality agreement?

An NDA is a legally-binding contract, made between you and another party, whether that’s an employee, or another business. Confidentiality agreements mostly apply when an individual or a business requires in-depth access to another’s working processes, and usually prevent them from disseminating information or material related to this on to another party.

Types of non-disclosure agreements

There are three types of NDAs you can draw up, depending on the business transaction being carried out.

Unilateral NDAs, or one way agreements, apply only to the ‘receiving party’ – they may not disclose any information provided to them by the ‘disclosing party’. An example might be a business asking their copywriter to sign an NDA so they don’t release information regarding a new product to competitors or the mainstream media.

Bilateral NDAs, or mutual agreements, apply to both sides of the business deal, and are common when two companies are going into partnership together. If things became sour further down the line, the information of each party would be safeguarded.

Multilateral NDAs apply to three or more parties.

What should I include in a confidentiality agreement?

The terms of the agreement will very much depend on the information being shared. Most NDA templates will include reference to the parties forming the agreement, the date it applies (it could expire once the information can be made publicly-known, for example), the terms of the agreement and also the conditions should it be breached.

Be aware that most breaches of confidentially come from internal areas of the business. Employees have an implied duty not to share trade secrets, but you should get assurances in writing to make this absolutely clear.

How to create a confidentiality agreement

You can create your own NDA, or download a template online. You’re probably best asking a legal professional to look over your agreement, to ensure it’s watertight, or you may be putting your data at risk.

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