Confidentiality contracts

Which non-disclosure template?

The basic purpose of non-disclosure agreements is to restrict the disclosure of confidential information.

In addition to the basic disclosure restrictions, non-disclosure agreements will often require that confidential information be held securely. Where information may be disclosed to particular persons (e.g. employees or suppliers) then there may be an obligation to place contractual confidentiality obligations upon those persons before disclosing the information.

There are a number of fairly standard exceptions to the disclosure restrictions in non-disclosure agreements. For instance, disclosure of public information and disclosure where required by law are usually permitted.

If your circumstances match one of our subject matter-specific agreements - which cover relationships such as inventor-manufacturer, creator-media company or web designer-client - then you should first consider that agreement.

Otherwise, if you are looking for something very straightforward, we suggest using one of the "standard" template non disclosure agreements; if, on the other hand, you want something with a little extra legal protection, you should consider using one of the "premium" templates.

The unilateral non-disclosure agreement templates should be used where only one party to the agreement is giving confidentiality undertakings. The mutual templates should be used where both parties are giving confidentiality undertakings.

Each non-disclosures letter is identical in substance to the equivalent unilateral non-disclosure agreement. They are simply the agreements transposed into letter form. You may want to consider using a non-disclosure letter in situations where an agreement-style document might seem too formal or legalistic.

Key provisions of NDAs

The different non-disclosure agreements and letters we supply are all based upon a single model. If you would like to learn more about the specific provisions of the documents, and the differences between the premium and standard versions, then read on.

Contractual definitions

Arguably, the two most important definitions used in our agreements are the definitions of "confidential information" and "permitted purpose".

"Confidential information"

Every confidentiality clause or contract should include a definition of confidential information. A common taxonomy is to differentiate between general classes of information, specific classes of information, and specific documents or items of information. All our templates suggest this sort of scheme.

Where the agreement is reciprocal, then it is often necessary to include two definitions of confidential information, one for the confidential information of each party.

If you are disclosing secrets under an agreement, you will want to ensure that the definition of confidential information is sufficiently broad to cover everything that you may in fact disclose. Where you are the recipient of secrets under an agreement, you should ensure that the definition is not over-broad, that it does not cover any information that you may need to use outside the restrictions in the agreement.

"Permitted purpose"

The permitted purpose definition appears in the premium documents, but not the standard ones. The purpose of the definition is to enable the parties to specify the purposes that the confidential information may be used for: it would be a breach of contract for the recipient to use the information for any other purpose.

Obligations of confidence

In addition to the basic and general obligation to keep secrets secret, our NDAs include more specific obligations, all optional, to:

• not disclose the information, unless otherwise permitted;
• act in good faith in relation to the information;
• only use if for a defined purpose (premium only);
• protect the information using, at a minimum, reasonable security measures; and
• tell the disclosor if the information is compromised (premium only).

In line with standard drafting practice, there are a number of suggested exceptions to these obligations. Information may be disclosed to employees, professional advisers, and so on who have a "need to know" and are themselves bound by relevant confidentiality obligations. The restrictions do not apply to information that is public or that is known to the recipient independently. Nor do the restrictions prevent the disclosure of confidential information where there is a legal or regulatory obligation to make the disclosure.

Indemnification

An indemnity is included in the premium agreements, potentially enabling an aggrieved disclosor to recover more generous compensation in the event of a breach of the agreement by the recipient.

Publicity

Although some information (e.g. the general facts concerning the existence of an NDA) may not be confidential as such, that does not mean that they should be announced to the world. A publicity clause may be used to restrict the issuing of press releases and other public disclosures, even where the information concerned is not confidential. Our premium agreements include a short publicity clause.