Confidentiality Agreements

Confidentiality or Non-Disclosure Agreements (NDA) are entered into to prevent unauthorized use or disclosure of information and business or trade secrets to unauthorized persons. A NDA is a legally binding contract in which a person or entity promises to treat specific information as a trade secret and undertakes not to disclose the secret to any one, unless authorized or legally bound to do so.

Such agreements are entered into by not only corporates but also by individuals who would be disclosing sensitive information to others for various reasons viz. by authors to producers or publishers or startups to venture capitalists or employees in a company.

It is commonplace for companies to enter into such agreements with their employees. If during the employment the company discloses any trade secrets to the employee, the employee must take all steps to preserve the secrecy. An NDA is important as it binds the employee from making any disclosure to a third party because once the secret is divulged, it is no longer a trade secret and may cause severe loss to the company. A company can maintain a competitive edge over its rivals by maintaining that its secrets are not divulged to its competitors.

Examples of what information cannot be protected are:

– Information that is already in the public domain
– Information that the recipient already know
– Information that the recipient learns from other sources
– Information that is required to be disclosed in law

Examples of what information can be protected:

– Secret Formulas
– Recipes
– Copyright,
– Software
– Engineering Drawings and designs
– Unpublished patent applications
– Concepts and know-how
– Business plans and strategies
– Client lists and other details

Broad Contents to be incorporated in a Confidentiality Agreement

– Define what is the confidential information
– Name the parties involved
– Mention why information is required to be disclosed to the recipient
– Specify what are the obligations of the receiving party for incorrect disclosure of the information
– Add a non-solicit clause
– Damages and injunction for breach
– Mention the term of the Agreement
– Jurisdiction clause
– Arbitration clause for disputes

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