What is a confidentiality agreement?

A confidentiality agreement is typically an agreement between a person (the discloser) who wishes to disclose confidential information for a specific purpose and the person to whom the information is disclosed (the recipient). It protects the confidential information and regulates the relationship between the discloser and recipient.

Do I need a confidentiality agreement?

We strongly recommend that anyone disclosing valuable confidential information in a commercial situation enters into one of these agreements (other than a disclosure to your accountants, bankers and lawyers who automatically owe you a duty of confidence).

In the absence of a confidentiality agreement, the law may in certain situations impose a duty of confidentiality to some extent on the recipient. However, having a written agreement gives certainty to the discloser and allows the parties to establish an agreement in areas that might not otherwise be covered.

An agreement will provide clarity and certainty to the relationship between the discloser and recipient, and will protect the value of the confidential information.

What is in a confidentiality agreement?

Our confidentiality agreement sets out detailed provisions in respect of the confidential information including:

• Who is disclosing and who is receiving the information.
• What confidential information is protected by the agreement.
• An obligation to keep the information confidential.
• A defined purpose for which the recipient may use the information.
• What will happen if the purpose or project for which the information was disclosed does not proceed – for example if a planned business sale fails to complete.
• The circumstances in which the recipient may share the information, with whom and subject to what further restrictions.
• How long the obligation of confidentiality lasts.
• Exceptions for the recipient where the confidential information becomes public knowledge or the recipient is obliged by law or regulatory authority to disclose the information.