In Short
- Review the confidentiality agreement to confirm the breach is covered and to understand the available remedies.
- Investigate the breach by gathering evidence on how the information was disclosed and its impact on your business.
- Seek legal advice to explore options, including potential legal action or injunctions to prevent further disclosures.
Tips for Businesses
Ensure confidentiality agreements clearly define what constitutes confidential information and outline the consequences of a breach. Regularly review and update these agreements to remain compliant with current legal standards.
When dealing with a breach of a confidentiality agreement, it is important to note that it is one of the more common legal documents. Many businesses insist that associates, contractors, and employees enter one before working together.
In most situations, ensuring that your counterparty has signed a confidentiality agreement will ensure you protect and keep your confidential information. Unfortunately, however, a breach of a confidentiality agreement is not uncommon because of the relatively common nature of such contracts.
There are a number of important steps to take in the event of a breach of confidentiality agreement. This article will provide an overview of those steps.
1. Review the Confidentiality Agreement
The first and most obvious step is to review the confidentiality agreement that has been breached. In some cases, the contract itself will outline the remedies for the breach. In any case, it is important to ensure that the breach you have discovered is a breach under the terms of the confidentiality agreement.
2. Investigate the Breach of Confidentiality Agreement
Investigating the breach is the next step in the process. It is not enough to merely suspect your counterparty of having breached the confidentiality agreement; you need concrete proof that this has occurred. The key issues to look for are:
- how the confidential information was released, e.g. was it an employee of your counterparty? was it intentional?; and
- the effect that the release of the confidential information had on your business, both from an economic and a more general perspective. This will also help determine the response required and whether legal action is the best.
3. Approach a Lawyer to Discuss Options
If the breach of the confidentiality agreement has significantly affected your business, it is time to discuss your options with a lawyer. The lawyer may assist you in getting an injunction on the breaching party to stop the continuing release of information. In most cases, you can take legal action for breach of contract. However, you must determine whether it is worth your time and effort. Other potential legal recourses may include copyright infringement, patent infringement or breach of fiduciary duty.
The exact legal strategy you should use will depend on your individual circumstances, which is why you will need to work with a lawyer. However, the good news is that if you have signed a confidentiality agreement, it is very likely you will have some recourse.
Download this free Commercial Contracts Checklist to ensure your contracts will meet your business’ needs.
Key Takeaways
A confidentiality agreement is the most effective way to protect confidential information, but no legal document can fully protect you from a dishonest or incompetent partner. If a counterparty breaches a confidentiality agreement, review the above points and work with a lawyer to check out your options.
If you need help drafting, reviewing or enforcing your confidentiality agreement, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A confidentiality agreement and a non-disclosure agreement are the same. People often use both terms interchangeably, but the contract serves one purpose: protecting the confidential information of your business or project.
Yes, it is often better, quicker, and more cost-effective to try to resolve any dispute outside of the Court. We recommend that the parties meet in good faith as a first resort and, if that is not successful, work through mediation. If none of these practices work, you always have the option of litigation.
We appreciate your feedback – your submission has been successfully received.
