Confidentiality Agreement Information
Alternate Names:
A Confidentiality Agreement is sometimes called a/an:
- Confidential Disclosure Agreement
- Non-Disclosure Agreement (NDA)
What is a Confidentiality Agreement?
A Confidentiality Agreement is a contract between two parties that describes sensitive or proprietary information that they plan to discuss, how the information can be used, and the legal remedies that may follow if the information is used inappropriately.
LawDepot's Confidentiality Agreement may be customised to meet the applicable laws in:
- Australian Capital Territory (ACT)
- New South Wales (NSW)
- Queensland (QLD)
- South Australia (SA)
- Tasmania (TAS)
- Victoria (VIC)
- Western Australia (WA)
What is confidential information?
Confidential information refers to any facts, details, or data that are not common knowledge or a part of the public domain.
For instance, a company may wish to protect internal business information to prevent competitors from using this information to gain a competitive edge.
In a business setting, confidential information can include:
- Customer information
- Intellectual property
- Marketing tactics
- Business operations
- Product details
- Proprietary computer technology
- Accounting information
When should you use a Confidentiality Agreement?
A Confidentiality Agreement is typically used in situations that involve the use of commercially sensitive information, such as:
- During a business acquisition, when a buyer is doing their due diligence and assessing the viability of a business
- During contract work, when an independent contractor needs access to sensitive information to complete a project or perform a service
- During the course of employment, when staff are often dealing with commercially sensitive information such as marketing tactics or product development
Is a Confidentiality Agreement enforceable?
While laws may vary depending on your jurisdiction, a Confidentiality Agreement can be legally enforceable if the recipient of the confidential information fails to maintain their duty of confidentiality (i.e. the responsibility of keeping the information secret) or threatens to make the information public.
In this case, the owner of the confidential information (the disclosing party) may seek legal remedies such as:
- A court injunction requiring the receiving party to refrain from spreading the information
- Damages (money) to be paid in compensation for breaching the agreement
However, it's important to note that it's up to a court to decide whether or not a Confidentiality Agreement can be enforced and the court's decision can be affected by how much time has passed, the nature of the confidential information, and the circumstances of the agreement.
Still, a Confidentiality Agreement is effective in protecting sensitive information because it provides evidence of the contract terms and outlines the legal remedies that may be taken if the contract is broken.
What clauses are included in a Confidentiality Agreement?
While a breach of confidence can be legally enforceable, it can sometimes be difficult to prove. As such, it's recommended to include non-competition and/or non-solicitation clauses in your agreement when applicable because there may be more evidence with which to prove your case in court.
A non-competition clause restricts a party from starting a competing company or sharing confidential information with competitors.
Similarly, a non-solicitation clause restricts a party from coaxing employees or contractors away from the other party in the agreement.
Including these clauses can make it easier to combat an unfairly obtained competitive advantage and can help to reinforce the strength of your Confidentiality Agreement.
How long does a Confidentiality Agreement last?
There are two routes you can take regarding the length of your Confidentiality Agreement.
First, you can specify a date for the duty of confidentiality to end. Once that date has passed, the information in the Confidentiality Agreement could be freely used by a third-party. For instance, if a product was developed using confidential information, the company who created the product could wait until the date the agreement ends to release the product.
In contrast, the duty of confidentiality can be perpetual, carrying on past the expiration date of the agreement. For example, trade secrets are generally protected by common law, so an employee who agreed to keep a company's trade secret may be expected to keep that secret even after they've stopped working for the company.
Who is required to sign a Confidentiality Agreement?
Both the disclosing party (whoever is revealing the information) and the receiving party (whoever is expected to keep the information secret) are required to sign the Confidentiality Agreement.
It's also strongly recommended that the signatures are witnessed by a neutral third party. The witness, or witnesses, can sign the document to guarantee the validity of the agreement.