A Confidentiality Agreement (Mutual), is a two-way legal document that you can use to disclose confidential information to a receiving party, while legally forbidding either party from disclosing that information to any third parties, be they a person or entity.
It is important to note that this document is only enforceable if it is signed by you and the other party before information is shared. If you are seeking to protect the information of one party, see our Confidentiality Agreement (One-Way).
A confidentiality agreement can also be referred to as an:
When the time of disclosure is during the time period specified before the termination of this agreement. If both parties have expressed consent prior through signature, the agreement is a binding legal contract that outlines a confidential relationship between the vendor/suppliers and the other party. Therefore, when a breach or violation occurs, you are able to claim rights in dispute against the violating disclosing party. These rights are outlined in the provisions of this agreement - some specifications include; an injunction, damage for loss, court order. The most commonly found right is if an employee breaches an agreement with a business/business owner then the employee can be immediately terminated.
Subject matter in the entire agreement is broad and can be customised to your needs. Common information that can be covered is inclusive of but not exhaustive to; patents, copyrights, financial information, customer lists, trade secrets. You can use this Lawpath template as a base and then customise the document accordingly.
It is not an essential element of a confidentiality agreement to impose a specific time-frame. It is recommended that your document should not contain a time-frame and an obligation of confidentiality remain until the information is no longer classified as confidential and enters the public domain. In cases where the parties decide to agree on a time-limit, to ensure enforceability, the deadline must not go over what is reasonably necessary to protect the legitimate interests of your business.
Like many contracts, this document is only enforceable in the country or state specified in the agreement. Similarly, this document is governed by the law/s in the respective country or state it is executed in. If you intend to take legal action to enforce this agreement or seek remedies for its breach, you will need to do so in the State or Territory Court the document was executed in.
One of the most common forms of confidentiality agreements exists between an employer and employee. Confidentiality agreements are beneficial in the context of employment because they allow for a free-flow of confidential information within the workplace to maximise business productivity, while at the same time prohibiting employees from using or disclosing confidential information. Employment agreements also often include a binding confidentiality clause.
When engaging with clients or potential clients, a business or entity may have the clients sign a confidentiality agreement when sensitive information is disclosed.
A business that relies on third-party vendors who may have access their confidential information should get the vendor to sign a confidentiality agreement during their business relationship to ensure their information is protected.
Having an independent contractor sign a confidentiality agreement where they may have access to confidential information during their employment, would prevent the contractor from acting on the information and protect the contracting entity.
Investors may be asked to sign a confidentiality agreement when commercially sensitive information is shared between the parties to ensure the information does not go public, and the information is protected.
A confidentiality agreement sets out the rights of a party in the event of a breach by the other party. These rights may include:
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