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 in circumstances 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 considering a potential sale of your business or part or your business.

In these circumstances, using a confidentiality or non-disclosure agreement is advised. Our Commercial Solicitors can help with this.

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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.

It is therefore strongly recommended that your business has 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 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 NDA or CA is drafted to cover the specific circumstances in which information will be disclosed.

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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 CA:

  • The definition of ‘confidential information’. The definition should be broad enough to catch all the categories of confidential information being disclosed.
  • What is the ‘purpose’ that the confidential information can 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; or
    - where both parties intend to disclose confidential information;
  • Duration. The agreement should clearly set out the duration in which the agreement and confidentiality obligations will remain in effect.
  • Intellectual Property Rights. Does the agreement deal with intellectual property rights (IP)? It is not uncommon to find provisions within an NDA that look to assert ownership over intellectual property rights that may arise as a result of the sharing of information. However, such provisions may not reflect what you want to happen to those rights, and therefore any provisions dealing with IP need to be considered carefully, or the risk is 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 for breaching the NDA or CA. The agreement should set out the specific remedies available for a breach of the agreement (i.e., damages or an injunction).
  • What jurisdiction the agreement is subject to. The law and court jurisdiction that will apply to the agreement in the event of any dispute should be stipulated.

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Here to help

The Commercial Team at Myerson can help protect your business by advising on, drafting and negotiating NDAs and CAs 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 regarding NDAs or Confidentiality Agreements, please get in touch with our Commercial Solicitors, who would be happy to assist

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