Confidentiality agreement

About this confidentiality agreement

Use this confidentiality agreement for situations where a contractor, consultant or supplier will learn sensitive information during the course of their work or service for you. The sensitive information may be directly related to the service the other party is carrying out (for example, a management consultant may need to know directors' salaries, or a parts supplier might need to know exactly what you are manufacturing with the machine). Alternatively, the other party may find out in the course of providing the service (for example, IT contractors may find out the identities of some of your clients as they fix a computer or a bathroom fitter might find out your hygiene habits).

You can use this confidentiality agreement to prevent the contractor or supplier from acting on the information, enabling you to thus protect your personal or business information or ideas. Signing a confidentiality agreement also reminds the other party that the information is sensitive, preventing them from claiming ignorance of its value to you. Of course total secrecy is best. But there are many occasions in life when secrets need to be disclosed, or might be found out.

This document is drawn broadly to cover all information passing to the other party, but in a way that enables you to insert your own precise secrets if you want to specify them.

The document gives you choices as to how you want the recipient of your information to deal with it. You may limit disclosure to the person who signs this agreement or you may allow him to pass the information to other professional advisers or employees or consultants. You decide.

Points to consider in how you manage confidentiality and non-disclosure

A non-disclosure agreement (NDA) is, for all purposes, a different name for a confidentiality agreement. “Non-disclosure agreement” is more commonly used in the USA and tends to suggest protection against passing-on of information alone rather than use of the information as well. The law in this agreement is basic contract law. It is strong and clear.

You should recognise that all the legal agreements in the world cannot prevent accidental or unintentional disclosure (for example, careless talk over a drink with a friend, or when leaving your documents out for public rubbish collection). A good confidentiality agreement (like this one) should therefore also cover what happens if the information is used or disclosed.

You can also manage risks by limiting the information that you disclose, and the number of people who know about it. Both these things are covered by this non disclosure agreement. Both individuals and business owners tend to be reluctant to ask for a confidentiality agreement from people they “trust” with their ideas, but who have no obligation to keep confidentiality (for example, friends, relatives, potential investors, partners and customers). This is a great mistake. The upside of protecting yourself against the loss of private data by insisting on an agreement far outweighs the downside of loss of private data of potentially causing offence in the short-term.

When to use this confidentiality agreement

This agreement is about how sensitive information will be kept confidential. The actual nature and subject of the information is not central to forming an agreement about how it will be used. Therefore, there are many situations in which this document can be used.

Either party can initiate use of a confidentiality agreement. If you are the receiver of information, you can make the other side at ease by suggesting the use of one before they do.

The agreement should be signed before information is disclosed.

The agreement should be used when a service provider, contractor or consultant may require or find out sensitive information in the course of acting for you. It could be used as a supplementary agreement to an employment contract, but only if the employment contract does not cover confidentiality already.

Examples of use could be when:

• You are hiring a business adviser on non-employment basis
• A supplier will need to become involved in your business or personal affairs (perhaps in order to deliver the service or goods)

Net Lawman also sells other similar agreements for slightly different circumstances:

• Two or more parties are disclosing information to each other: Mutual confidentiality agreement.
• Only one party is disclosing information to others: Confidentiality agreement.
• A creator of an artistic work wishes to show his or her work for third party assessment with a view to sale, publication, manufacture or use. This agreement expands on copyright protection: Confidentiality agreement: protect created work.

Confidentiality agreement features and contents

• Either or both parties can be individuals or businesses
• Can be used to protect defined information, or generally
• The subject and nature of the information being kept confidential can be anything

The paragraphs in the agreement include:

• Interpretation
• Definition of the confidential information: can be as broad or specific as you like
• Excluded information
• Non-disclosure
• Security of disclosed information: how information must be kept and stored
• Ownership and warranty
• Undertakings not to steal customers and staff
• Disclosure required by law
• Other legal provisions to protect your interests