Confidentiality agreements

Protect your proprietary business information.
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Protect confidential information FAQs

Most of us will be asked to sign a Confidentiality Agreement sometime during our career. Or, we may choose to ask our employees to sign an agreement as part of their employment paperwork. These agreements help protect proprietary company information.

Who should sign a Confidentiality Agreement?

Confidentiality Agreements protect your proprietary information from being shared with your competitors. Anyone who is privy to your company's protected information could potentially share that information with your competitors or could use the information to become a competitor. While Confidentiality Agreements, often called Non-disclosure Agreements, can be difficult to enforce, they can offer your company some protection.

Besides employees, you may ask the following to sign a Confidentiality Agreement:

  • Vendors
  • Clients
  • Freelance or contract workers
  • Merger and acquisition stakeholders

What are the limitations to Confidentiality Agreements?

There are limitations to Confidentiality Agreements. For example, an agreement cannot be used to protect illegal activities such as harassment or discrimination. You also cannot prosecute those who may overhear private company information unknowingly.

Confidentiality Agreement limitations:

  • Public knowledge. If the shared information is already well-known, it is often no longer considered protected information.
  • Simple to replicate. If your idea or product is simple to produce without knowing insider company information, the idea may be too simple to protect.
  • Proof of damage. If you cannot prove that the released information hurt your company, you may not win your case
  • Proof of source. You must be able to prove who shared your information.

Do I have to sign a Confidentiality Agreement?

You may be wondering, Do I have to sign a Confidentiality or Non-disclosure Agreement (NDA)? You may be asked by employers or business associates to sign an NDA. These agreements are fairly common and are intended to protect a company's proprietary information. Employees are often required to sign one as part of their employment agreement. Business associates are also often asked to sign one. For example, if they are sharing product information with you about a product that has not yet been released to the market.

If you are asked to sign a Confidentiality Agreement, make sure you understand the agreement and what information is considered protected. NDAs also include a time limit. It may be for a few years or until the information becomes public knowledge (such as rebranding or an acquisition). In most situations, signing the document is not optional. Usually it will need to be signed before you move forward in the business relationship; however, you can ask them to explain the terms of the agreement for you.