Confidentiality Agreements: Protecting Your Information

Confidential information may be confidential for a range of reasons. It might be a trade secret: something that must remain secret for the sake of your business. Alternatively, it may be confidential for reasons of privacy; perhaps your business stores customer data, or other sensitive personal information. Most businesses deal with information that demands a certain degree of confidentiality. But in some situations, it’s necessary to disclose your information, or other people’s confidential information to a third party. So how can you control that information once it leaves the safe confines of your business?

The unauthorised or inadvertent disclosure of confidential information can adversely affect you and others. Sometimes, it’s even illegal. Fortunately, you’ve got options in terms of protecting your secret information. The most effective option is also the simplest: confidentiality agreements. In my experience, confidentiality agreements are an effective and economical precaution. So let’s take a look at exactly how a confidentiality agreement can protect your sensitive commercial information.

Confidentiality Agreements: Here’s what they are

Confidentiality agreements are agreements between multiple parties. Those parties are divisible into two categories: the recipients, and the holder. The holder is the party who has possession of confidential information. The recipients are the parties to whom that information is disclosed. The broad purpose of a confidentiality agreement is to govern what the recipients can and can’t do with the information they receive from the holder. How do they do that? It’s simple: deterrence. Confidentiality agreements are enforceable; if the recipient breaks a confidentiality agreement, the holder can take action to recover a penalty.

When can information be further disclosed under a confidentiality agreement?

It is often necessary to disclose confidential information to third parties. Sometimes, you have to disclose confidential information to remain commercially competitive. Other times, you need to disclose confidential information to comply with legal requirements. A confidentiality agreement will set out when a recipient can, and cannot pass on confidential information that you’ve given them. If you’re disclosing confidential information to another party, you need to identify the circumstances in which it’s acceptable for the recipient to pass that information on. I take into account your interests, and apply my experience to ensure that those boundaries are clearly set in your confidentiality agreement.

To whom can confidential information be disclosed under a confidentiality agreement?

It’s not only circumstance that governs acceptable disclosure of confidential information. You also need to think about who will receive that information, if it is passed on by a recipient. Sure, the circumstances may be such that further disclosure is acceptable. But that further disclosure shouldn’t be indiscriminate. If a situation arises in which a recipient of your confidential information needs to pass it on, you want to know that it is being passed on to the least number of people possible. Luckily, with a confidentiality agreement, you can gain some assurance in that regard. I am familiar with the life cycle of confidentiality agreements. That familiarity helps when I draft confidentiality agreements. I will help you restrict the number of people who can receive your confidential information.

Have you Signed a Confidentiality Agreement? Here’s what you need to know

As with all agreements, confidentiality agreements have two sides. You can could be the holder of confidential information, or you could be the recipient. So what do you do if you’ve signed a confidentiality agreement? That depends on the terms of the agreement. Some confidentiality agreements strictly govern what you can and cannot do with the information you’ve received. Others are a little more lapse. However, distinguishing the two varieties can be tricky. Confidentiality agreements employ the same legal principles as most contracts. Their terms can be complex, and they can be extensive. To put it simply, the ramifications of confidentiality agreements are often misunderstood.

As a result of their complexity, confidentiality agreements can place you at a disadvantage. In certain cases, they may overreach a little, and excessively restrict what you do with the information you receive. In other cases, confidentiality agreements can contain terms that are simply unfair. Although that is uncommon, it is something to be aware of. If you’re feeling uncertain about a confidentiality agreement that is binding you, seeking honest legal advice is important. I can help. My experience with confidentiality agreements extends to drafting, interpreting, and enforcing. I can advise you on your position, and help you take the appropriate steps to comply with the agreement you’ve signed, or contest elements of it that aren’t lawful.

Confidentiality and the Law: Where it All Started

Confidentiality agreements are powerful. But the source of their power isn’t new. In fact, confidentiality has been recognised at law for centuries. It began with the equitable duty of confidence, which emerged to protected vulnerable parties in certain commercial relationships. But equity is difficult to enforce. Doing so requires intervention from the court, and it’s quite expensive as a result.

That’s why, as commerce became more streamlined, so too did the legal mechanisms that protect confidential information. Contracts superseded equitable duties, and became the most pervasive field of law, in a commercial context. From the laws of contract, confidentiality agreements arose. They share the characteristics of contracts, and damages are recoverable where a confidentiality agreement is breached. Today, they are one of the most prevalent, and effective means of managing and protecting sensitive information. To put one in place, contact me. I can prepare a confidentiality agreement for you, or advise you on your position if you sign one.