Information on Confidentiality Agreements
Confidentiality agreements are contracts that protect the confidentiality of the information specified within the document. A confidentiality agreement, also known as a nondisclosure agreement, can be used to protect the personal information of clients, patients or the employer; or trade secrets learned during business transactions or employment. If the information is used or disclosed without your permission, you can request a court injunction to stop the violation and sue for damages.
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Be Specific
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A confidentiality agreement must be very specific in terms of what information is to be protected. A business owner can specify all customer information, special techniques, his pricing formula, banking information, supplier information and pricing and any other information that could endanger his business or his clients or patients.
The length of time the contract is to be valid is also important. Do you just need to protect an upcoming release, or is the information going to remain vital throughout the life of your business? The time clause could specify that the end of the relationship does not permit the disclosure of the information. It could also demand the return of any company documents or products upon the termination of the relationship.
An acknowledgment section placed in the agreement forces the signer to affirm he knows he must keep the secrets specified within the agreement or face penalties.
Mutual or One-Way
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A mutual confidentiality agreement is used when two individuals or companies are exchanging information. For example, if a manufacturer was offered revolutionary technology that could improve his product, neither company would want the information leaked to competitors.
If only one of the parties in the agreement needs to keep the secret, a one-way confidentiality agreement provides the necessary protection. It is often used with employees, subcontractors and potential investors.
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Trade Secrets
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Using a confidentiality agreement to protect information about your business or product that is not common knowledge maintains your competitive edge.
Employees, subcontractors and friends can be prohibited from talking to the press, selling the idea to your competitor, discussing it on the Internet, etc. It also prohibits them from discussing it with their friends or family, who may then leak the information.
Exclusions
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In some instances, the law determines the person who signed the confidentiality agreement has no obligation to protect your ideas. For example, another company, independent of any leak, develops similar ideas, procedures or products before receiving the confidential information is free to use its own creation. The person who leaked the information cannot be penalized because it did not affect your business.
When a court order is issued to a party to force him to reveal information covered by the agreement, he must notify you of the court order, but he cannot be held liable for revealing the information.
The agreement should include a statement specifying that if one clause is unenforceable pursuant to a state law or a court ruling, the remainder remains valid and enforceable.
Valid Contracts
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For any contract or agreement to be valid, each party must gain from the contract. If the signer is an employee, the terms of his employments, including wages, duties, and benefits must be disclosed in the agreement. The expected benefits of the company such as the employee will devote his working day to conducting the company's business, he will not steal, etc., must also be noted.
The laws of each state vary on confidentiality agreements. A lawyer should review the document before you issue it. If a contract is unlawful, you will not be able to enforce it.
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References
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