There is
continuous struggle for improvement in the corporate world. The organizations
keep focusing on doing innovations every day in order to capture market shares.
Similarly organizations struggle to become number one in their line of
business. For that sometimes organizations try to adopt unjustified ways in
order to make their competitors loose. They try to get confidential information
about their competitors in order to inflict them heavy losses. Such competitors
get ruined once they lose confidential information by any means.
There are
hundreds of agreements signed between various parties every day. Similarly
there are many agreements that have a major role in the corporate world.
Confidentiality agreements have a vast usage in the corporate world as all the
leading businesses of the world enter into these agreements in routine
practices. There are many categories of these agreements and most businesses
enter into multiple of confidentiality agreements in routine practice for the
same reasons.
Confidentiality
agreements are all about making things secure. They ensure that nothing
confidential goes into the wrong hands. Even if something gets in the wrong
hands then the parties in the agreement can be taken to task. There are
adequate remedies available as per the terms of confidentiality agreements. The
organizations facing troubles because of disclosure of data or information are
entitled for such remedies once facts are proven against any of the parties in
the agreement.
Confidentiality
agreements are signed between two or more than two parties. They are legally
enforceable at all places around the world. The courts all around the world recognize them
and decide matters of disputes regarding them on merits as per the local laws. In
this kind of agreement the parties agree to share some secret data or information
which is not shared in normal circumstances. The parties are liable to abide by
the terms of confidentiality agreement once they give their consent to it.
Confidentiality
agreements can be long and they can be small depending upon many factors.
Usually the practice is that parties enter into simple agreements that are not
very lengthy. However professional organizations prefer to have detailed
agreements so that their rights and interests are protected in the best manner
possible under such agreements. The detailed agreements have various sections
and parts. There are various provisions in them which can be invoked in order
to deal with all kinds of disputes and violations arising at later stages. In
absence of any such provisions the agreements are useless at times and are a
problem for the parties so consenting to them.
A
confidentiality agreement is probably the best tool which a business can have.
Whenever a business has to trust another business or individual to the extent
of disclosing non public information then such business should enter into a
confidentiality agreement. The interests of such a business regarding the
disclosure of data and information can be best protected under this agreement.
For the same reasons this agreement is widely under use in all kinds of
businesses around the world with having good legal sanctity.
What are the various forms of Confidentiality
agreements?
There are
many shapes of confidentiality agreements. The reason is that the local laws
regarding these agreements differ from place to place. Similarly there are
different practices in different areas of the world in the similar manner. There
are many names used for these kinds of agreements at different places around
the world. Some of the commonly used names of confidentiality agreements are:
·
Secrecy agreements
·
Non-disclosure agreements
·
Proprietary information agreements
·
Confidential disclosure agreements
All of
these agreements are almost the same in their essence and they are all in
professional use by various organizations around the world. They are legally
enforceable and challenge able in most of the courts around the world. The
terms of these agreements play vital role because at most of the places the
terms of such agreements are given preference over the local laws. The courts
decide the disputes according to the terms of these agreements in most of the
cases as the local laws give them importance and preference.
Confidentiality
agreements can be signed between any kinds of parties. The parties signing
confidential agreements can belong to one organization and they can be from different
organizations entering into a single project or venture. No matter whatever the
form of a confidential agreement is it gives fruitful results at the end of
day. There is no harm of entering into one such agreement whenever the
confidential information or data is at stake.
What is the purpose of Confidentiality Agreements?
One of the
basic purposes of confidentiality agreement is to protect the information from
getting into the wrong hands. This kind of agreement restricts the flow of data
and information to the third parties. The parties to the agreement remain loyal
with each other with strictly professional attitude once they execute this
agreement with each other.
There can
be various purposes for which parties enter into confidentiality agreements. In
most of the cases the data and information which the parties cannot share
elsewhere is specifically mentioned in the terms of confidentiality agreement. That
forms a relationship of trust between the parties and they are liable to keep
that trust intact as long as their relationship is governed by such agreement.
A purpose
of this kind of agreement is to make things clear to the parties beforehand.
Whenever parties have to share secret information then it is best to settle
things before moving ahead. The parties should know what to do and what not to
do so that problems do not arise at later stages. That makes things easier and
secure for all the parties that enter together in a confidentiality agreement
at the end of day.
One of the
purposes of confidentiality agreement is to improve the performance of parties
to the contract. When parties enter into a confidential agreement then targets
are achieved in the best possible manner. The performance of parties to the
confidential agreement increases many folds in the presence of such agreement. The
reason is that the parties trust each other and they move ahead with professional
attitude and enthusiasm to work in the best possible manner.
The parties
in a confidentiality agreement know their limits well. They do not try to
exceed their limits because they know consequences of that very well once an
agreement is there. The parties feel comfortable and relaxed when the agreement
is there. They do not have any fear of getting deceived from the other parties
in the agreement. In the end the venture or project which is carried out by the
parties together turns out to be a major success. The goals are achieved and
the future targets are set on the bases of improved performance by all the
parties.
Can trade secrets be part of Confidentiality Agreements?
There are
many businesses that enter into confidentiality agreements in routine practice.
They do that because they have to trust parties in order to carry out some
important business ventures with them. They share trade secrets with the
parties in the confidentiality agreements so that they can move forward in the
best possible way. They share information and data which they never do
otherwise after consenting to such agreements. This helps the parties in making
the impossible things into possible once they move ahead together.
Whenever
two businesses enter into a joint venture, merger and any other similar kind of
business activity then they have to share lots of knowledge for getting
success. That knowledge is usually a combination of confidential and
non-confidential data and information. If such knowledge gets into the hands of
competitors of one of the businesses in the joint venture then that can cause
some real problems. The knowledge that
is of non public nature should never be disclosed and for protecting that
confidentiality agreements play their role.
Confidentiality
agreements are always signed between the organizations whenever they go for
mergers. In such cases the information is usually provided by both businesses
to each other and they become bound to not to disclose that to the third
parties. In most of the cases the businesses doing merger have difference of
nature of businesses and they cannot misuse the information for themselves.
However when such data or information reaches the competitors of any of such
businesses in merger then that can be really harmful for both.
Even in
absence of a confidentiality agreement the businesses are ethically bound not
to share the information of other businesses in their partnerships. However
things become professionally protected under the umbrella of a confidentiality
agreement. Trade secrets get protected legally when a confidentiality agreement
is there. The businesses never think of taking undue advantages of other
parties in that way.
Can the confidentiality agreement be signed between
individuals?
Confidentiality
agreements are not only signed between organizations rather they can be signed
between individuals. There can be an individual signing a confidentiality
agreement with the organization in certain situations. The need of the
agreement always arises whenever an individual or a business has to understand
things done by a business in running its affairs. There can be secret processes
containing top secret information regarding production, sales, marketing and
other departments. It becomes important at times to give access to that
information to other parties in the agreement.
In many
organizations it is a practice that the organizations get this agreement signed
with all the employees that work in it. The reason is that the employer doesn’t
want its confidential information to get into the wrong hands. Similarly some
organizations enter into confidentiality agreements with all the small vendors
that transact with them on routine bases. There is different nature of
businesses and similarly these agreements are signed accordingly.
Whenever a
confidentiality agreement is signed between parties then it can have provisions
to restrict all the parties as well as one single party. When an agreement
restricts both the parties from disclosing information then it is a mutual
confidentiality agreement. In such kind of agreement the information is usually
disclosed by all the parties and they enter into agreement so that they do not
cheat each other. Similarly the agreement can be a simple one imposing
restrictions on one party only and it is referred as a unilateral secrecy
agreement. In this kind of agreement the secret information is disclosed by one
party to the other and the other party is bound to keep it secret under the
provisions of the agreement.
An aspect
is that most of the confidentiality agreements are mutual in nature. That way
such agreements restrict both the parties to the agreement from disclosing any
kind of data or information to the third parties. Such kinds of agreements
appear fair from their very essence and they create rights and obligations on
both ends rather than putting only one party under the obligations.
Should the receiver be protected in confidentiality
agreements?
Majority of
the confidentiality agreements made these days are simple. They are problematic
for the receiver in that way because they do not protect him or her. There
should be adequate clauses in the confidentiality agreements that should
protect the receiver in cases where no wrong is done by him or her. The
receiver is legally bound to protect the information and data which he/she
receives from the party in the contract. If any information or data is received
by receiver from the third party then the doctrine of privities of contract
doesn’t apply. For the same reasons the agreement should contain adequate
clauses for that.
There are
always chances of a receiver that he/she might get information or data from
other sources then the parties in the agreement. In such cases the receiver is
not legally bound to keep such information so obtained as a secret. Even the
moral obligation is not there in many instances and circumstances come in which
such receiver has to disclose such information to third parties. In such cases
the receiver should be protected according to the terms of the agreement so
that no problem is faced if no wrong is done by such receiver.
What can be penalty in case of violation of
confidentiality agreements?
There can
be a strong penalty if the secret information or data is disclosed in violation
of the confidentiality agreement. The provisions of the agreement determine the
penalty in most of the cases. In absence of any such provisions the damages can
be in accordance with the loss faced by one or more than one parties.
In some of
the confidentiality agreements there is a time period mentioned. The parties
are bound to keep the data and information secret till that time period if it’s
mentioned. Such data and information should not be shared in any way with the
third parties if no such time period is mentioned in the agreement.
What things should be included in the confidentiality
agreements?
There are
many things that are generally included in the confidentiality agreements. Some
of these things include:
·
The date on which the agreement is signed between the
parties.
·
The particulars of parties in the agreement. There can
be two or more than two parties.
·
Definition clauses. There can be definition of things
that are confidential and things that are non-confidential in the nature.
Things that can possibly fall under the definition of confidential are also
mentioned at times.
·
Nature of business, information regarding vendors,
suppliers and customers can be mentioned in the confidentiality agreement.
·
Time period for keeping the information secret is
mentioned in the agreement. The time period can be more then the time period of
a particular venture or project. For example there can be a limit imposed of
two years after the project ends to keep the information or data secret.
·
Things that fall under the category of permissible
disclosure are sometimes mentioned in the agreement. The clauses of permissible
disclosure are there to protect the interests of receiver at times. The
information and data which is public or the one that is received from other
sources usually fall under the category of permissible disclosure.
·
The obligations that are created once the agreement is
signed are mentioned in detail in most of the professional secrecy agreements.
These obligations include details about circumstances in which the disclosed
information can be used and in which the same can be restricted of use.
·
The measures that should be taken ordinarily to
protect the information and data should be mentioned. The measures taken to
protect the information whenever it’s subjected to further disclosure are also
mentioned at times.
·
Remedy available to either of the parties in case one
or more than one party violates the terms of agreement is mentioned
specifically. It can be in shape of damages, compensation and in shape of
actions to be taken to make things right in the best possible manner.
·
The forums to address in cases of disputes are
mentioned in the agreement. Similarly whenever the court demands any
information then its method of disclosure is part of professional agreements in
this respect.
There are
many different practices regarding the confidentiality agreements in different
parts of the world. There are various formats used in the making of such
agreements in different areas. Laws are very much different between states when
it comes to USA and Canada. So the confidentiality agreements are different
between states to states and between countries to countries.
How to make a confidentiality agreement?
This is
modern era with having all kinds of facilities easily available. One can easily
find confidentiality agreement samples these days. There are websites that
provide confidentiality agreements free of cost to all. One can easily download
few samples, templates and examples of confidentiality agreements these days
for using as a reference.
The easiest
way of making confidentiality agreement is to use the forms. There are
confidentiality agreement forms available over the internet having simple and
easy nature. Anyone can fill up those forms and once they are executed they
take the shape of agreements. There are blank spaces on those forms which are
required to be filled up with information. The information usually required on
these forms includes the particulars of parties and simple terms so that
parties become legally bound to follow them.
The
professional way is to make a confidentiality agreement with keeping each and
every word under special consideration. Relying on a sample confidentiality
agreement is not a feasible option for big businesses. For the same reasons all
the professional organizations hire professional law firms so that they get the
confidentiality agreements that stand for them in cases of disputes. The
confidentiality agreements made by big businesses usually have complicated
terms and conditions which protect them in cases where such agreements are violated.
An aspect
is that the confidentiality agreement should be made in accordance with the
local laws. For example if there is a confidentiality agreement required in the
US State of Texas then it should be in accordance with the local laws of that
State. Similarly it should have proper format that is in practice in the US
State of Texas. There should not be any provisions in such agreement that makes
it non-enforceable in nature.
The
agreement should be complete with having all the relevant provisions in it.
There should not be any missing links in the agreement. It should have all the
necessary provisions as part of the terms so that in times of need everything
is covered under the agreement. For that it is best to hire the services of
professionals or at least samples made by professionals should be seen before
the final agreement is drafted.
The person
drafting the confidentiality agreement should have a legal sense. Only that way
such person can make an agreement that can protect the rights of all the
parties in the agreement. Similarly the parties become legally bound to follow
the terms of confidentiality agreement when they know that it is complete and
they can be taken to task if they violate the agreement once it’s executed.
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