Maintaining privacy is essential to a successful business relationships. Whenever confidential information is shared with another business or employee, it is advisable to enter into a confidentiality agreement. That way, the party receiving the confidential information will understand the implications of sharing any sensitive information and will be less likely to spill trade secrets.
Unilateral Confidentiality Agreement vs. Mutual Confidentiality Agreement
Confidentiality agreements can be defined as legal contracts between two or more parties with the promise that any information shared will be kept secret.Naturally, the confidentiality agreement will also stipulate instances where disclosure would be permissible. For example, upon request by law enforcement officials.
Confidentiality agreements can be defined as either mutual agreements, where both parties will be obligated to keep the information confidential or as unilateral agreements, where only the receiving party is obligated to keep the secret.
A mutual confidentiality agreement is practical where both parties share confidential information. In contrast, a unilateral confidentiality agreement is more applicable to a business disclosing confidential information to a prospective licensee or investor. Either agreement will be useful where a party discloses valuable information under secrecy. And in both cases, a confidentiality agreement will require the recipient to maintain secrecy.
Scope of Protection
A confidentiality agreement is used to protect any information that is not meant to be known by everyone. It legally prohibits the other party to disclose that information by any means. By creating that agreement, you and that other party are establishing a confidential relationship, which must be created in writing. It is best to put your agreement in paper instead of merely sharing a verbal agreement. So, in case the other party violates it, you can take legal action.
Breaching A Confidentiality Agreement
The enforcement of a confidentiality agreement will involve some kind of monetary damages award.This will be paid by the breaching party to reimburse the non-breaching party for any loss. Damage caused by leaked confidential information will be calculated by the competitor company’s ability to copy or replicate any confidential aspect of the product. Also, the severity of financial damage incurred as a result of that loss of business will be considered. Confidentiality agreement definition.