Confidentiality Agreement Solicitors

I am looking for...

Home » Contracts » Confidentiality

 Confidentiality Agreement overview 

We provide an experienced and cost effective legal service for NDA and confidentiality agreements.. In some situations a standard type agreement may suffice but in many situations, a tailored, fully considered agreement is recommended. As with any business situation, the more valuable or important the situation or transaction, the more important it will be to have an agreement which is bespoke. Contact us to discuss. for protecting

Confidential information is an extremely important business asset, and therefore it is vital that it is protected. Confidential Information may be stored in a number of different formats, such as electronically, in hard copy or otherwise, may include documents, illustrations, specifications, software, databases, know-how, customers, suppliers, financial information or other resources.

 Common uses for non-disclosure agreements 

• Intellectual Property – whether a new idea, software or database, it is vital to ensure you have an agreement in place.

• Agents or distributors – will almost certainly need to have access to your confidential information and will need to agree to protect it.

• Investments or joint Ventures

• Directors and employees

 Key considerations 

During commercial negotiations or due diligence

In every case, it is important to think through the agreement carefully and to build in practical as well as legal safeguards. Simply including a powerful penalty clause such as a liquidated damages clause is not advisable. Such clauses are often partially or fully unenforceable under English law.

 Safeguards to consider with an NDA 

• only release information when you have to – consider staged release as a transaction progresses.

• think about what happens if the party to the agreement has to disclose it to 3rd parties.

• getting a personal commitment is advisable as well as dealing with any limited liability entity.

• think about how you would get the information back, how it is stored, how it might be copied.

• think about jurisdiction – if you are dealing with a non-UK party, ensure the agreement is subject to English law jurisdiction.

• don’t assume that suing for damages based on breach will be easy or straightforward, or that any damages would get paid.

Mechanics of disclosure and return of information

If you are the disclosing party i.e the person revealing the confidential information you need to ensure that any information disclosed and in the form in which it is disclosed is both protected from disclosure and will be returned to you or destroyed upon your request without delay.

Confidential information may be disclosed or accessed in a variety of mediums and it can be difficult to control, such as preventing information being copied.

 What can go wrong/what to watch out for 

• severability issues – a common pitfall with NDA agreements is that, where clauses are found to be penalty clauses or are otherwise not enforceable that this might result in the whole agreement being uneneforceable. Consequently, it is very important to include a severability clause so that if there are legal problems with one or more clauses, the rest of the agreement still stand and apply.

• waiver issues –  a common mistake, especially where there is the prospect of a lucrative or important business relationship is to inadvertently waive a breach of contract based on the desire to still do business or proceed. The danger with this is that waiving one part of the contract may result in waiving rights to enforce breaches of other clauses of a confidentiality agreement. It is therefore important to ensure that the agreement is clear that a waiver of one breach is not to be construed as a general waiver of breaches of the contract.

 Typical clauses in a Confidentiality Agreement 

The Parties

The first and arguably most important thing to consider when drafting a confidentiality agreement is the name of the parties subject to the agreement. For example, is it only to cover the contracting parties? Or should is also cover holding companies and/or subsidiaries?

Definition of Confidential Information

A confidentiality agreement will either prevent a party from disclosing any information or specific information and this will depend on the relationship between the parties and the nature of the confidentiality information and therefore the definition of confidential information should be given careful consideration when drafting the agreement. A confidentiality agreement should be clear and unequivocal as to what information is covered by the agreement.

Permitted Use

The purpose for which confidential information is being provided and the circumstances in which it can be used.

Disclosure Period

Most confidentiality agreements will provide for a disclosure period; that is the period that binds the parties under the confidentiality agreement. Any disclosure made outside of the disclosure period will not be considered a breach of the confidentiality agreement.

Exclusions

A confidentiality agreement should provide for circumstances during which the parties are permitted to make a disclosure. For example, this could be because: (i) the party that the information is being provided to may already have prior knowledge of that information; or (ii) the receiving party may have obtained that information from another source; or (iii) that information may already be available in the public domain; or (iv) there is a legal obligation to disclose that information, for example, pursuant to a court order.

The exclusion provisions may (and should) also provide for confidential information to be released to related parties who have a mutual benefit in being provided with this information.

It may also be worth, depending on which side of the agreement you are on, to insert a provision that allows disclosure of confidential information that has been received through other means (i.e. information about the other contracting party not provided by that party), even if this may not have come through the public domain. Without such a safety provision any disclosure, even inadvertent, could result in a claim for damages.

Other Key Clauses

Other provisions that require careful consideration include:

  • The degree of effort on the part of the contracting parties to ensure that confidential information is kept confidential. For example, must the parties use “best endeavours” or “reasonable endeavours”? Should confidential information be kept in a secure place and with what level of security? And so on;
  • Perhaps an obligation or an indemnity to ensure that, where a permissible disclosure is made, the receiving party also keeps the information confidential; and
  • A clause that requires the parties, at the end of their working relationship, to return to the other party any and all information they hold about the other.
  • Jurisdiction – usually English law;
  • Entire Agreement– providing that this agreement is the only agreement between the parties in relation to confidential information and that it is intended to supersede any prior agreement;
  • Third Party Rights – a clause that prevents third parties from enforcing any terms of the agreement;
  • Severance – a clause that prevents the invalidity of a particular clause from rendering the whole agreement void; and
  • No waiver clause – a clause that provides that any failure or delay in exercising a right under the agreement will not constitute a waiver of that right, for example, a right to terminate the agreement in the event of a breach.

 If you need lawyers for a confidentiality agreement or an NDA, whether you are in London or not, get in touch with us to discuss or to get a quote for advice or drafting.