Confidentiality Agreement

You should use a Confidentiality Agreement when you are going to exchange confidential information, i.e. your business idea.

Confidential Information is protected under Common Law in the UK, provided it is actually confidential, is disclosed under circumstances of confidentiality and any disclosure is damaging. However, a written confidentiality agreement will often focus minds and may give greater protection than under Common Law.

As it is often difficult to enforce a confidentiality agreement, make sure that you keep some information back until as late as possible. When you begin to negotiate, with a potential trade partner or investor, it is often too early to enter into a full-blown agreement. There is usually some intellectual property disclosed therefore a confidentiality agreement can protect your rights. At least, the intellectual property has an independent existence and protection.

An agreement highlights that what you are disclosing is confidential. It acts as a detriment to a party unfairly exploiting the information. It says to the recipient of the information, "this is valuable". Taking action against unauthorised use is much easier if an agreement is in place.

Note also that the agreement must make it clear that the undertakings of confidentiality do not extend to information which was in the public domain in the first place or which comes into the public domain other than as a result of a breach of the agreement: otherwise, it will not work. A well-drafted employment contract will contain confidentiality provisions to protect against disclosure by your employees, both while they are working for you and afterwards.

This is a comprehensive agreement which deals with a mutual exchange of confidential information for the purposes of the parties deciding whether to enter into a business relationship. The definition of purpose can be replaced if required; for instance, for the purposes of negotiating an acquisition, or deciding whether to enter into a joint venture, or for the purposes of evaluating a product for purchase, or for manufacture under licence, and so on.