All businesses hold commercially sensitive information that is confidential and of significant value to the business, such as information relating to clients, suppliers, operations, business strategies, products and services, financial information, trade secrets and intellectual property rights.
The disclosure of such information to a third party may be necessary for several reasons, including where:
- your business is developing a new product, app or service which you are seeking funding for;
- you need to discuss specific aspects of your business with a potential new supplier or manufacturer;
- you are entering into discussions with key services providers such as IT support or other forms of outsourcing; or
- you are seeking investment into the business or considering a potential sale of your business or part or your business.
Our Commercial Solicitors outline their top tips for confidentiality or non-disclosure agreements below.
Why use a Confidentiality Agreement or NDA?
Whilst the disclosure of such information may be made in good faith with a view to working collaboratively in the future, it is vital to ensure that your business is adequately protected from a third party using the information to gain a competitive edge or passing it on to other competing businesses.
This is generally achieved by having a legally enforceable non-disclosure agreement (NDA) or confidentiality agreement in place, which will allow you to feel protected when entering into business discussions or negotiations, knowing that your confidential information is just that, kept confidential and protected.
It is unlikely that a generic template will be comprehensive enough to provide your business with the adequate protection required and could lead to a third party disclosing your confidential information without providing you with any right of recourse.
Therefore, it is important that the agreement is drafted to cover the specific circumstances in which information will be disclosed.
What to think about when entering a NDA
The following are some of the key considerations to think about when entering into an NDA or confidentiality agreement:
- What is confidential information? - The definition should be broad enough to catch all the categories of confidential information being disclosed.
- Permitted Use – What purpose can the confidential information be used for? The agreement should specify in which circumstances and for what purpose the recipient can use the confidential information.
- One way or mutual? - The agreement should cater for situations where:
- only one party intends to disclose confidential information
- both parties intend to disclose confidential information
- Duration - The agreement should set out the duration in which the agreement and confidentiality obligations will remain in effect.
- Intellectual Property Rights - It is not uncommon to find provisions within an NDA that seek to assert ownership over intellectual property rights that may arise due to information sharing. However, such provisions may not reflect what you want to happen to those rights, and therefore, any provisions relating to IP should be carefully considered, or the risk is that you may be inadvertently assigning such rights to the other party.
- Return of confidential information - The agreement should set out what will happen to the confidential information if the project or transaction does not proceed (i.e., the confidential information will be returned or destroyed).
- Remedies - The agreement should set out the specific remedies available for a breach of the agreement (i.e., damages or an injunction).
- What law applies to the agreement? - The governing law and court jurisdiction that will apply to the agreement in case of any dispute should be stipulated.
Contact Our Confidentially & Non-Disclosure Agreement Experts
Here to help
The Commercial Team at Myerson can help protect your business by advising on, drafting and negotiating NDAs and confidentiality agreements to ensure that they provide adequate protection to your business by ensuring that they are both legally binding and tailored to the specific circumstances.
If you have any questions or would like more information, please get in touch with our Commercial Solicitors, who would be happy to assist.
Contact Our Commercial Solicitors
If you need legal advice regarding matters relating to non-disclosure agreements, please contact our Commercial lawyers on:
01619414000
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