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Safeguarding Your Business Secrets with Confidentiality Agreements


What are Confidentiality Agreements?


They are a legal contract between two or more parties not to disclose information that needs to be shared for a specific purpose. Such information is defined and referred to as ‘confidential information’.


A Confidentiality Agreement (‘’CDA’’) can also be referred to as a "Non-disclosure Agreement" or a "Secrecy Agreement".


CDAs can be split into 3 categories:

i. 'mutual' (meaning both parties are restricted by obligations of confidentiality)

ii. 'unilateral' (meaning only one party is so restricted)

iii. 'multilateral' (meaning more than two parties are restricted)


The typical set up involves two parties but, even where only one of the parties discloses information, some practitioners believe it is good practice to always put in place a mutual CDA. This covers the possibility of the 'receiving party' ending up as the 'disclosing party'.


Why and how are they used?


CDAs can have several roles. They're not just for major deals like business sales and forming new collaborations they can also cover more routine everyday discussions between the parties involved.

Whether you are an individual, a company, or an organisation, considering confidentiality is crucial. If you are sharing information in a meeting, for example, that you wouldn't want to reach the ears of a third party, laying down the legal groundwork acts as a safety measure ensuring that what is said in the room stays in the room.


A CDA needs to define the nature of the 'confidential information' and the purposes for which the information may be used.


However, inevitably there will be exceptions to the definition and there is likely to be circumstances where divulged information isn’t construed as confidential.


The CDA may also have a time scale. How long should the information remain confidential?

As you can imagine, CDAs also form an integral legal safety net where intellectual property (IP) is involved.


Some examples of where one might wish to have a CDA put in place:


· Trade secrets;

· Business methods or processes;

· Design, technical expertise;

· Future plans for the business;

· Prospective or current client lists;


This list is not exhaustive as, simply put, they cover any important business details where disclosure is undesirable!


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.

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