Overview


Confidentiality agreements (also known as secrecy or non-disclosure agreements) are contracts entered into by two or more parties in which the parties agree that certain types of information shared between them will remain confidential.
These agreements are the best tool to protect your private, technical and business information and will also guard you against unwanted disclosures in circumstances where it is necessary to share such material with another party.
This article aims to provide you an insight on confidentiality agreements and its requirements.

Confidentiality Agreements


Information may be property (in the legal sense) where it is unique to its owner. An owner and/or controller of it can sue another party for breach of confidence if:

(a)     the information is sufficiently confidential;
(b)     the other party holds the information under an obligation of confidence; and
(c)     the other party has misused or improperly disclosed the information, or is likely to do so.

That right to sue comes from the general law and not from a contract. So it exists even if there is no agreement between the owner and the other party. The basic purpose of an agreement is to clarify any potential ambiguity and make it easier to sue in case of bad behaviour.

It is good practice to create a confidentiality agreement with any party to whom confidential information is to be disclosed and that person does not otherwise have a lifelong duty to maintain secrecy. Such persons might be employees, vendors, licensing partners, and potential investors in your business.

Having a confidentiality agreement in place:

(a)       confirms that a confidential relationship exists;
(b)       establishes explicit notice that you consider the information being disclosed is confidential; and
(c)       provides continuing protection for certain period of time after the implied confidential relationship ends. For example a restriction of use and disclosure of confidential information by former employees.

Terms In A Confidentiality Agreement


A confidentiality agreement helps remove any doubt, not only about the existence of the duty of confidentiality, but also about the scope of the duty, the type of information covered, and the remedies available if the duty is breached.

Following are the terms one may include in a confidentiality agreement in order to safeguard the information from being misused or improperly disclosed.

Definition

The agreement should define confidential information, for the purposes of the agreement.

The definition might include:

(a)       a copy of the original information;
(b)      an analysis, opinion or other material derived from evaluation, examination or testing of the information;
(c)      any information the other party (before or after its disclosure) confirms in writing is confidential to the owner;
(d)      the fact and/or content of the confidential agreement itself or that a disclosure was made; and
(e)      the fact or content of a discussion or negotiation about a potential commercial relationship between the parties.

Term

A confidentiality agreement may govern the time limit for disclosure of information before the agreement is signed, during the time of disclosures and for a certain period of time after the disclosures are made (for example 3 years).

The end time limit allows the other party to act freely on information it obtained years ago and that is probably no longer confidential. A time limit is however an optional clause in the agreement.

Duties and Remedies

By using a confidentiality agreement you may tend to impose the following duties on the other party:

(a)        to use the information in the same manner as it applies to its own confidential information;
(b)        to mark any of the information held in tangible form as “confidential”;
(c)        to keep any of the information held in tangible form, in a locked safe;
(d)        to keep any of the information held electronically, in encrypted files accessible only by secret password;
(e)        not to copy or change any of the information held;
(f)        in case of any voluntary disclosure made by the other party to a third party:
(i)       the other party must notify the third party that the information is confidential in nature to you; and/or
(ii)       the other party must obtain from the third party a dated, signed acknowledgement addressed to you in terms that the information is confidential to you; or
(iii)      the other party must notify you about the details of the third party and the reason for the disclosure.
(g)       the other party is also liable to you for any misuse or improper disclosure of the information by a third party, in case if there is any voluntary disclosure made by the other party to a third party; and
(h)      when you request, the other party must:
(i)        return to you or destroy (as per the instructions from you) any of the information held in tangible form or erase permanently any of the information held electronically; and
(i)       certify to you that after a full search of the records of the other party and the records of any person to whom the other party has made a voluntary disclosure, all required destruction and deletions of the confidential information took place.

The other party should acknowledge that in case of a potential or actual breach of the said agreement, you may obtain an injunction from a Court without proof that you have or might suffer actual damage from the breach.

How We Can Help You?


There are numerous issues that can arise, depending upon the nature of your information.
We at Owen Hodge Lawyers can help you to have a clear understanding of the entire procedure in regard to the confidentiality agreement and can assist you through the process considering your best interest.

We can also draft, revise and structure new and existing agreements, tailoring them to meet the requirements of your business and particular circumstances.

Contact the team at Owen Hodge Lawyers today on 1800 770 780 to get advice on confidentiality agreements or any other business contracts.

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