What Is a Confidentiality Agreement?

A confidentiality agreement, also known as a non-disclosure agreement or NDA, is a contract between two or more parties that involves certain information and how its secrecy should be maintained. The majority of companies and organizations use this to protect trade secrets or any knowledge that could potentially lead to their downfall if spread to the public. So should a situation arise wherein you are forced to disclose important information to another party, then make sure to prepare a confidentiality agreement document.

How to Write a Confidentiality Agreement?

how to write a confidentiality agreement?

1. Decide if the Agreement Is Mutual or One-Way

A standard confidentiality agreement can be one where both parties involved share the responsibility or one where it falls all on the shoulders of a single individual. Mutual agreement is usually for situations wherein you are providing confidential information to a company while expecting something in return. One-way confidentiality is required if you're sharing the information with an employee or contractor who will not be sharing anything in return and will simply be working for you.

2. Point Out Those Who Are Involved

The confidentiality template must always have the complete names of those who are involved. This is to point out who exactly has access to confidential information. If it's between two individuals, simply write down their names and any details that will help with identification. If it's a partnership between two companies, then the names of the representatives of both must be included along with specifying who else within their respective companies will be involved.

3. Define the Confidential Information and Exclusions

This is where you will need to point out exactly what information should be confidential. This can be anything that the parties involved have decided must remain secret. You must then point out what information one of or both members of the party may share with others. Be sure to make it clear as to what may and may not be shared and clarify to whom they may share the confidential information with.

4. Establish the Responsibilities of the Receiving Party

Clarify exactly how the individual or business receiving the information will go about in using it. You will have to write down the limitations of the simple agreement and how this information can be used, as well as providing the standard in which it must all be protected.

5. Set the Time Period

You must point out the exact time in which the information shared will remain confidential. There will be two time periods that you need to consider: the period of time in which the disclosure will be made and the time period in which the information must be kept confidential. The standard amount of time and schedule would typically be around 5 years, but this can be discussed between both parties if necessary.

6. Set the Penalties

If either party member breaks the agreement, then legal consequences must be taken against the responsible party. While the Legal document can point out it can be handled by those involved, most have judges or arbitrators decide. How detailed you want to be with the penalties will depend on the uniqueness of the confidential information and the damage caused by revealing it to those who are not meant to learn about it.

7. Include Any Miscellaneous Provisions

Lastly, you will want to include anything that will further clarify matters concerning confidential information. This can include what laws will be applied to the agreement and who will be responsible for paying the attorney fees in the event that the confidential agreement is breached by either party. Just makes sure that parties involved negotiate on what other terms to include to avoid future issues.

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