What is a confidentiality agreement?
An NDA is a written contract that sets out how confidential information can be shared and under what terms; it essentially defines what information is confidential, who can access it, and when it may be disclosed.
The aim is to prevent sensitive information from being misused or shared without consent, which is why an NDA should be clear and specific; this makes it easier to enforce if there is a breach.
When should you use an NDA?
It is sensible to have an NDA in place whenever you plan to share information you want to keep confidential.
This could include discussions involving:
Intellectual property
Business plans or strategies
Client or customer information
The NDA should be agreed before any confidential information is shared. If not, your legal position may be weaker if a dispute arises.
The importance of clear and enforceable terms
For an NDA to work, it must clearly identify what confidential information and set out limits on its use and disclosure.
Vague or broad agreements are harder to enforce, especially in the event of a dispute. Having a skilled commercial solicitor draft your NDA helps ensure the agreement fits your situation and the risks involved.
Non-circumvention clauses: What are they & how they protect business interests
Sometimes, it is appropriate to include a non-circumvention clause in the NDA.
It is particularly useful if one party acts as an intermediary or broker; a non-circumvention clause prevents the other parties from bypassing the intermediary and dealing directly, thereby protecting the intermediary’s position.
It can also help keep business contacts and relationships confidential, reducing the risk of unfair competition or lost opportunities which can be costly.
What happens if a confidentiality agreement is breached?
An NDA should specify what happens in the event of a breach, this often includes financial remedies such as compensation.
Monetary damages may not fully make up for the loss of confidential information, once sensitive data is disclosed, the impact can be significant and sometimes cannot be undone.
It is better to prevent problems from unfolding in the first instance with a well-drafted agreement than to rely on remedies after a breach.
Why legal assistance is imperative for an NDA
As with any contract, a confidentiality agreement is only as effective as its drafting, that being said an experienced lawyer can ensure that you’re hitting the main aspects, this being:
The definition of confidential information is precise
The obligations on each party are clear
The agreement is tailored to your specific commercial situation
Getting legal advice from us at Orwins early, gives you the best chance of enforcing the agreement and protecting your business interests.
