What is a Confidentiality Agreement?
A confidentiality agreement, also called as a nondisclosure agreement or NDA, is a contract in which the parties involved swear to protect the confidentiality of classified information that is revealed during employment or any other type of business transaction.
Many are using confidentiality agreements especially in the field of high technology, mainly for computer and Internet companies.
What is the purpose of a Nondisclosure agreement or confidentiality agreement?
The idea of having an NDA is to establish a confidential relationship between the parties involved, the one who has a trade secret and the one to whom the classified information was disclosed, making them legally bound to keep the information a secret.
A confidential relationship can also be established, not only by an NDA but also through an oral agreement or, it can be implied from the parties' conduct. But these relationships are much harder to prove than those that are based on a written agreement.
Confidentiality agreements are also used to protect trade secrets. Trade secrets refer to any information not commonly known which gives the business an advantage in the marketplace. For instance, one can prohibit someone from disclosing or revealing an idea for a new website, a secret invention design, or classified material contained in a copyrighted software program.
Categories of Confidentiality Agreements
Confidentiality agreements are often categorized as either "one-way" or "mutual".
• One-way confidentiality agreement
A one-way agreement is one in which only one party is making a disclosure. For instance, one explains his/her secret information to an investor or contractor.
• Mutual confidentiality agreement
A mutual agreement is used when both parties are trading secret information. For instance, one party gives confidential information for a company to be evaluated and the other party gives the former classified information about their marketing.
Elements of a Confidentiality Agreement
A confidentiality agreement has five important elements:
• Definition of secret information
• Exclusions from secret information
• Obligations of the receiving party
• Time periods
• Miscellaneous provisions
Definition of Secret Information
Confidentiality agreements provide a list of the categories or types of secret information to be protected in the agreement. The idea is to create the subject matter or the boundaries of the disclosure without actually revealing the secrets.
Exclusions from Secret Information
Confidentiality agreements exclude some information from protection. This means that the party that receives the information that is excluded has no duty to protect it. These exclusions are based on established principles law, where information is not protected if it was discovered or created by the receiving party preceding any connection with the disclosing party.
Obligations of the Receiving Party
Confidentiality agreements will state that the receiving party must keep and maintain the information as a secret and limit its use. Under most state laws, the receiving party cannot breach the confidential relationship, persuade others to break it, or persuade others to get the confidential information by improper means.
Time Periods
Some confidentiality agreements include a period, which requires the receiving party to keep the secret for a limited period of years.
In most agreements, five years is common but many companies insist on only two or three years. Time is negotiated by involved parties and will depend on their relative bargaining power.
Miscellaneous Provisions
At the end of every confidentiality agreement include miscellaneous terms, also known as "boilerplate". This includes:
• Which state's law will be applied in an event where the agreement is breached
• Whether or not arbitration will be used in the event of a dispute
• Whether lawyers' fees will be given to the prevailing party in a dispute
For businesses, the best way to protect its trade secrets is by the use of a confidentiality agreement or nondisclosure agreement.
To help you with issues involving confidentiality agreements and related concerns, consult with our skilled Los Angeles attorneys. Visit our website at http://www.attorneyservicesetc.com/ to avail of our free case analysis.
Source: http://www.ArticlePros.com/author.php?Kamille Pagibigan
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