A Confidentiality Agreement (otherwise known as a Non-Disclosure Agreement) is an agreement between at least two parties setting out the terms on which each party will keep the other party’s information confidential.
The content and extent of Confidentiality Agreements vary greatly depending upon the intentions of the parties, the nature of the relevant business between them and the period within which the Agreement will take effect.
What is “Confidential Information”?
When you are collaborating with others or entering into business arrangements, the information that you want to protect can be in various forms. Your business may have ideas, strategies and other valuable material that you wish to ensure is not taken or used without your permission. Simply put, you want to protect what is yours.
For example; a company looking to launch a new product may engage a marketing entity to develop a marketing strategy for that new product. However, the product itself is still in the development stage and will not be released for a period of time. The company will want to protect all the information they exchange with the marketing entity throughout its contact.
Different Confidentiality Agreements
A Confidentiality Agreement may be waived for a set period of time. This sort of Agreement is referred to as a ‘Terminating Confidentiality Agreement’ and is generally applicable for projects or transactions with a set duration.
Conversely, the Agreement may include restrictions that are enforced beyond the period of the business relationship. A company launching a new product at some point in the future will want to ensure that the information shared with the marketing entity is protected, at least until the product is released. This sort of Agreement is referred to as a ‘Non-terminating Confidentiality Agreement’; the obligation of confidentiality may be ongoing and exceed the relationship between the parties.
A trade secret is any formula, pattern, device or compilation of information used in a business that gives the owner an opportunity to derive an advantage over other persons who do not know or use it. The risk of releasing trade secrets commonly arises when you are entering into business discussions with competitors. ‘Trade Secrets’ could be recipes, designs or methods central to the success of a business. ‘Trade Secrets’ bind parties to an ongoing agreement of confidentiality.
In considering which type of Confidentially Agreement is right for you, you will need to consider the scope of the relevant confidential information and the remedies available if a Confidentiality Agreement is breached.
If you have any questions relating to your rights and obligations under an existing Confidentiality Agreement, or you need assistance to draft one, the team at Innes Dean Tararua Law can assist you today.