Confidentiality Agreements. Are you protecting your business's information?

Sometimes called (amongst other things) a "Non-disclosure Agreement" or a "Secrecy Agreement", a "Confidentiality Agreement" ("CDA") is a legal contract between two or more parties not to disclose information that has been shared for a specific purpose. The term 'confidential information' will be defined in the CDA and disclosure of such will be regulated in accordance with its terms.

CDAs are often put in place to cover preliminary business negotiations such as, for example, a sale of a business or a collaboration involving a new product or invention. They can also be used for more general business discussions where, say, there is a need to understand the processes used in the other party's business for the purpose of evaluating a potential business relationship.

It is important that individuals, companies and/or organisations consider confidentiality (and whether a CDA should be put in place) prior to having business discussions. If there is any information to be disclosed during a business meeting that you would not wish to be disclosed to a third party, then it is prudent to prepare a CDA.

CDAs can be 'mutual' (meaning both parties are restricted by obligations of confidentiality), 'unilateral' (meaning only one party is so restricted) or 'multilateral' (meaning more than two parties are restricted). Typically, there are two parties to a CDA and some practitioners believe it good practice to put in place a mutual CDA at all times in case the 'receiving party' later ends up as a 'disclosing party'.

A typical CDA will contain (amongst other things) the following provisions:

1. the definition of 'confidential information';2. the purposes for which such information may be used;

2. exceptions to the definition (ie circumstances where the information divulged does not constitute confidential information);

3. the period that information is to remain confidential.

CDAs can be used to share intellectual property and/or commercial information or they can form part of the rules covering a specific relationship such as an employment relationship. They can cover:

1. trade secrets, eg a programme or process;

2. technical information, drawings and/or designs;

3. business plans;

4. customer and prospect lists;

5. other commercial information.

Note: CDAs with public sector bodies need to be carefully considered because any information that you provide may be disclosed under the terms of the Freedom of Information Act 2000. This legislation gives a general right of access to information held by public authorities.

This should not be relied upon for legal advice. If you would like any further information or advice please email richard@clariclegal.co.uk.