What is a Confidentiality Agreement

A confidentiality agreement is a legal agreement that binds one or more parties to non-disclosure of confidential or proprietary information. A confidentiality agreement is used in situations where sensitive corporate information is not to be made available to the general public or competitors. Also known as a non-disclosure agreement (NDA).

BREAKING DOWN Confidentiality Agreement

A confidentiality agreement is a standard written agreement that is used to protect an owner of an invention or idea for a new business. It is also an important document between two companies that are contemplating a merger or a commercial transaction that must be withheld from public knowledge. In the workplace, any individual who has access to sensitive information (an employee or a contractor for a firm) is often required to sign a confidentiality agreement to guard against disclosure of competitive information that may harm the firm. The agreement is unilateral (one party signs), bilateral (both sign) or multilateral if many parties will have access to sensitive information.

Main Elements of a Confidentiality Agreement

The agreement will name the party or parties involved, the items subject to non-disclosure, the duration of the agreement and the obligations of the recipient(s) of confidential information. The document will clarify that exclusions to the agreement include information that is: 1) already known by the person or persons who are signing the agreement; 2) already in the public realm; and 3) easily learned or could be learned independently outside the company that drafted the agreement. The agreement will also define instances of permissible disclosure (e.g., to law enforcement) and disclosure exceptions.