Non-disclosure agreement

Confidentiality is one of the few protections a business can put in place before it has anything else to protect. Once information has been disclosed without an agreement, there is not much to fall back on. The equitable duty of confidence exists, but it turns on showing that the information had the necessary quality of confidence and was imparted in circumstances importing an obligation, and that is an expensive argument to have after the event. A signed agreement replaces the argument with a document.

Mutual or one-way, decided at clause 2

This template does both. Clause 2 offers two options: take the first where both businesses will share confidential information, and the second where only one of them will. Delete the option you are not using. Everything after it works either way, because the obligations are written by role rather than by party, so whoever discloses is the Disclosing Party and whoever receives is the Receiving Party. That matters in practice, because the side that expects to do all the disclosing at the start of a conversation is often the side receiving by the end of it.

The Purpose is the clause that does the work

Schedule 1 asks you to describe the Purpose, and it is worth more care than anything else in the document. The Purpose sets the only use the other side may make of the information, so a vague one weakens the whole agreement. "Discussing a potential commercial relationship" permits almost anything. "Evaluating whether to license the Disclosing Party's scheduling software for use in the Receiving Party's clinics" does not.

The second thing to get right is marking. Clause 1 asks you to identify information as confidential when you send it, and to confirm anything said in a meeting or on a call in writing within 14 days. Information that was never identified as confidential is considerably harder to protect later.

What a confidentiality agreement cannot do

It cannot stop anyone reporting a crime, making a protected disclosure, or telling the police, a regulator or a lawyer about harassment or discrimination. Clause 5 says so, and it should not be deleted. For the same reason this is not the document to use as settlement terms with an employee or worker: that is a different instrument with its own statutory requirements.

When to take advice rather than use the template

Where the information includes trade secrets or personal data, where the real exposure is what the recipient might build afterwards rather than what they might repeat, or where the discussion is the start of a sale of the business. In the second case confidentiality alone does not prevent independent development, and the point to negotiate is non-use and ownership.

If what is being discussed is a product, a process or a brand, ownership needs settling as well as secrecy. Our intellectual property and trade mark solicitors and commercial contract solicitors deal with the two together.