Business confidential information can be extremely valuable, and protecting that information is vital.
That is why some businesses enter into confidentiality agreements, also known as non-disclosure agreements or NDAs. This agreement is an essential tool if you want to protect your company’s proprietary information.
Whether or not you should use a confidentiality agreement for your business is primarily determined by how valuable the information that you want to share is, as well as your line of business or work, and how much you stand to lose if the confidential information is disclosed to the wrong parties or the general public.
Generations Law Group provides legal counsel to business owners throughout Idaho. Read on to learn more from our attorneys about how we can help you decide whether a confidentiality agreement is best for your business.
What is a confidentiality agreement?
A confidentiality agreement is an agreement that is entered into by two parties wherein one or both parties agree to disclose confidential or sensitive information to the other party during their business relationship. That information must not be shared with anyone else other than the parties to the agreement unless it is with the written consent of either party. In other words, both parties are bound to secrecy when it comes to that confidential information.
A non-disclosure agreement is used by businesses or individuals who want to protect initial discussions between them before entering into certain commercial transactions or contracts that are more formal.
Many businesses use confidentiality agreements or NDAs to protect the sensitive information they need to disclose to suppliers, partners, independent contractors, and employees, among others.
Examples of confidential information include:
- business deals,
- client lists,
- financial details,
- intellectual property,
- strategic plans, and
- software documentation.
The benefits of using a confidentiality agreement for your business
1. It gives you the confidence to share sensitive information
Some businesses are not progressing the way they should be because they are reluctant to share certain information with other parties. The end result is that they miss out on having beneficial business relationships and opportunities.
Some certain people or companies can only assist you if they are privy to certain information. If you know that you would benefit more by sharing that confidential information, you can always use a confidentiality agreement.
There will be clauses in the agreement which specify the following:
- The confidential information.
- For how long that information should be kept confidential.
- Specific reasons the other party can make use of that sensitive information.
- What remedies will be available if the other party breaches the terms of the contract?
2. It clarifies the information that is considered confidential
Another reason why an NDA is beneficial is that it helps to define what confidential information is. As the party disclosing sensitive information, it is crucial to make confidential information as broad as possible. Information that is commercially sensitive must also be included in the definition.
3. The non-disclosing party is limited when it comes to using the confidential information
If you want to provide sensitive information to the other party for a particular reason, entering into a confidentiality agreement is highly advised. When you enter into the agreement, the other party can only use that sensitive information for that specific purpose.
For instance, the main reason for disclosing confidential information can be to enable a potential buyer to conduct due diligence on a particular company which they would like to purchase. If the non-disclosing party uses the information for any other reason apart from what is specified in the agreement, it will be in breach.
Experienced contract lawyers in Idaho
If you require a confidentiality agreement or want to discuss whether it’s necessary for your business, Generations Law Group is here to help. We have decades of experience contract drafting and providing all types of legal advice to Idaho business owners. We understand the importance of drafting agreements and other legal documents correctly to be enforceable and legally binding. Contact us for your consultation today.