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What Is a Confidentiality Agreement for Business Purposes?

A confidentiality agreement for business purposes is one made between an employee and employer agreeing that certain types of information that pass between the parties shall not be revealed to any other party employed or otherwise.

What Is the Point to Confidentiality Agreements?

Businesses like to use confidentiality agreements for a variety of reasons:

  • To protect sensitive, technical, or commercial information from disclosure
  • To prevent the forfeiture of valuable patent rights
  • To define exactly what information can and cannot be disclosed

What Kind of Information Can be Kept Confidential?

The information that can be included in a confidentiality agreement is practically unlimited. Most highly technical, sensitive, or commercial information flowing between the parties involved in the agreement can be designated confidential.

What Should Be Included in a Confidentiality Agreement?

Aside from party names, there are a few other key provisions you should ensure are placed within a confidentiality agreement:

  • Clause specifying time periods for which the information can and cannot be disclosed, if ever a time period for disclosure exists. Very specific dated starting and end points to the agreement (i.e. "1/1/2004 thru 1/1/2005") should be specified, not left general and vague (i.e. "for one year").
  • A "no implied license" clause should be inserted into the agreement stating that the recipient of the confidential information or technology is not entitled to ownership of the information or technology, and upon completion of work using the information or technology, the information or technology should be returned.
  • Clause specifying the state law to be applied if there is a breach in the agreement.
  • Clause specifying the type of proceeding to be conducted in the case of a breach (arbitration, mediation, or trial).
  • Clause specifying whether attorney's fees should be awarded to winning party.

What's the Difference between a Non-Disclosure Agreement and a Confidentiality Agreement?

There actually aren't any differences. They are the same thing with different names.

Should I Consult a Lawyer when Contract Drafting and Review?

Contract negotiations, especially in the context of important financial contracts, can be tolling and difficult. An attorney can assist you with negotiations so your needs and requirements will be met. Additionally, a lawyer can help you with drafting and reviewing contracts, and explain to you your duties under the contract. An attorney will look out for your best interests throughout the entire contract process.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 11-12-2014 04:34 PM PST

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