Advice on Useful Business Documents

As stated in Terminology Made Simple, documents that protect confidentiality are referred to by a number of names, but they are essentially the same document: Deed of Confidentiality, Non-Disclosure Deed or Confidentiality Agreement.

It is prudent to execute the document as a deed rather than an agreement as that avoids any concerns over the possible lack of consideration if no money is exchanged.

It is always crucial to consider what you are trying to achieve and who you wish to contract with.

Who do you want on the hook for the obligations and who can you best take action against to assert your rights?

Choice of the right party (particularly if the other party belongs to a group of companies) is often based on financial, legal and logistic considerations.

Once you’ve paused to consider the purpose of the document and who the parties will be, some other standard provisions are:

Parties: Who will be the Recipient and give the confidentiality undertakings. Is it the main company or a subsidiary that you wish to bind? Or, would it be more appropriate to get individual undertakings from each of the Recipient’s employee who will have access to your confidential information?

“Confidential Information” definition: Includes any information (such as records, financial information, reports, product specifications, technical information and forecasts) that you provide to the Recipient, but it excludes any information already in the public domain or which the Recipient already knew.

“Purpose” definition: The nature and scope of the purpose is defined. The Recipient is restricted from use the information for any other purpose or disclosing it to any other person unless disclosure is required by law.

If it must be disclosed the Recipient must inform you, take all steps to resist or narrow the required disclosure (and assist you in that process too).

Disclosure to representatives: If the Recipient is permitted to disclose the information to any of its representatives, the Recipient must: limit the disclosure to what is strictly necessary; make the representative aware of the confidentiality obligations; have them agree to be bound by these undertakings; and make them aware that any failure to maintain confidentiality would be construed to be a breach of the Recipient’s undertakings.

Unauthorised access, use or disclosure: The Recipient must inform you of any unauthorised access, use or disclosure of Confidential Information and provide you with assistance to prevent that breach by complying with your directions.

Ownership of information: While the recipient is granted access, the information remains your property.

Return or destruction of information: Once the purpose is completed or upon your request, the Recipient must return or destroy the information.

Breach of obligations: Sets out what action you can take if the undertakings are breached.

Continuing obligations: The obligations will continue for a certain term or until the information enters the public domain.

Disclaimer: You disclaim (as much as the law permits) liability for any loss or damage related to the Recipient’s use of the information.

General: There are a number of boilerplate provisions which are a useful addition to most documents.