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The Elements of a Confidentiality Agreement

By Edited May 27, 2015 0 0

A non-disclosure agreement, usually called a confidentiality agreement, is a legal contract between two or more parties. The purposes of a confidentiality agreement are to:

  • Allow companies to approach potential partners and customers with a proposal that the other party is legally prohibited to impart;

  • Share intellectual property or trading information;

  • Protect classified information by not disclosing it to people who are not involved;

  • Formalize a relationship, commonly between an employer and employee, and

  • Specify and define the information that the parties involved can either disclose or kept

These elements should be present in a non-disclosure agreement:

  • Definition of Confidential Information – Confidential information are everything in the agreement that has commercial value or utilities in the business for the Disclosing Party. The contract should specifically state the scope of the confidential information. Some Disclosing Parties are scared of indicating the information on the contract. If the information has to be written, the Discloser should label the material CONFIDENTIAL or other similar warning. It is also advisable to categorize the information to establish boundaries without disclosing any classified data.

  • Exclusions from Confidential Information – There are also some information on the contract that is not considered confidential. The other party involved in the agreement has no obligation to protect those excluded information. The excluded information include those that are "known or will be known by the public, information that WAS discovered by the Receiving Party before the Discloser revealed it, learned by the Receiving Party through other means, and are disclosed by Receiving Party with Disclosing Party's written approval."

  • Obligations of Receiving Party – This element states that the Recipient must keep the confidential information's secrecy. The Receiving Party should restrict access to employees, contractors, and other parties. They cannot violate the "confidential relationship" and persuade others to breach or acquire the secret.

  • Time Periods – The confidentiality will be in effect only up to a certain period of time. The Receiving Party is out of the agreement if the information is no longer a secret or until Discloser sends a written notice. The time period should be enough for the Disclosing Party, but can be negotiated. Usual time period is from two to five years.

  • Disclosure – The provision states that Recipient has the right to receive the information for keeping the information classified. The Discloser should consider the scope of this provision cautiously.

  • No Use – Here, the Discloser wants to be sure that the Recipient will not use the information for other purpose aside from that cited on the agreement.



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