Pro­tect your­self with a Con­fi­den­tial­i­ty Agreement

In Brief

One of the first con­sid­er­a­tions with any type of new ven­ture is how to pro­tect your busi­ness, valu­able idea or con­cept if you need to dis­close it to others.

When is a con­fi­den­tial­i­ty agree­ment needed?

If you need to dis­close your valu­able busi­ness infor­ma­tion or ideas to a poten­tial part­ner, advis­er or investor then a con­fi­den­tial­i­ty agree­ment is an essen­tial tool.

What is a con­fi­den­tial­i­ty agreement?

A Con­fi­den­tial­i­ty Agree­ment” or a Non-Dis­clo­sure Agree­ment” is a legal­ly bind­ing con­tract which con­tains promis­es from the recip­i­ent of the con­fi­den­tial infor­ma­tion to lim­it the use of the infor­ma­tion to a spe­cif­ic purpose.

Con­fi­den­tial­i­ty agree­ment tips

A con­fi­den­tial­i­ty agree­ment must do three things:

  • define what infor­ma­tion is con­fi­den­tial information”
  • iden­ti­fy the spe­cif­ic pur­pose the for which infor­ma­tion will be supplied
  • restrict its dis­clo­sure and iden­ti­fy any per­mis­si­ble disclosures.

The fol­low­ing state­ments should be includ­ed (if applicable):

  • dis­clo­sure is not intend­ed to trans­fer any rights in such information
  • there is no exclu­siv­i­ty grant­ed to the recip­i­ent in the con­fi­den­tial information
  • there is no oblig­a­tion on the dis­clos­er to pro­vide con­fi­den­tial information
  • the sup­ply of con­fi­den­tial infor­ma­tion does not con­sti­tute an offer of any kind
  • no war­ran­ty is giv­en about the accu­ra­cy or com­plete­ness of the information.

The fol­low­ing state­ments should be includ­ed (if applicable):

  • the recip­i­ent must keep the infor­ma­tion confidential
  • the recip­i­ent is respon­si­ble for any unau­tho­rised disclosure
  • the recip­i­ent acknowl­edges that breach of the agree­ment may cause loss to the discloser
  • the recip­i­ent indem­ni­fies the dis­clos­er for any loss aris­ing from the recipient’s breach of the agreement
  • the recip­i­ent must return all con­fi­den­tial infor­ma­tion on demand
  • the recip­i­ent agrees not to solic­it or approach employ­ees, cus­tomers or sup­pli­ers of the dis­clos­er or inter­fere with its business.

The fol­low­ing state­ments should be includ­ed (if applicable):

  • the term of the agree­ment – how long the agree­ment should be in force
  • gov­ern­ing law and juris­dic­tion – the laws of which state or coun­try should apply.

If you would like any fur­ther infor­ma­tion please contact: