A confidentiality agreement / non-disclosure agreement (NDA) is an agreement between two parties that is entered into in circumstances where either or both parties will disclose confidential information to the other in the course of their relationship.  It is generally recommended that the agreement be entered into prior to any confidential information being disclosed. By entering into a non-disclosure agreement, the relevant party/parties acknowledge that any information disclosed in the course of their relationship may be confidential in nature and agree that they will not disclose that information to third parties, except in limited circumstances as set out in the non-disclosure agreement (if any).

Five key benefits of using a non-disclosure agreement

1.       A non-disclosure agreement allows the parties to tailor their confidentiality obligations, agree on when those obligations do not apply and agree on their obligations on and from termination of the NDA, depending on their particular circumstances.

2.       A non-disclosure agreement enables the parties to define “confidential information”.  For example, confidential information may include trade secrets or any information or document about, or in any way relating to the discloser in, any media or form that is acquired by, or made available to, the recipient in the course of the relationship between the parties.

3.       A non-disclosure agreement can include provisions dealing with the consequences of the recipient breaching the non-disclosure agreement.  In addition to damages for breach of the non-disclosure agreement, the discloser will likely be permitted to apply to a court to seek injunctive relief preventing the recipient from further disclosing the confidential information in breach of the non-disclosure agreement and the recipient will be responsible for any costs incurred by the discloser in seeking any such relief.

4.       A non-disclosure agreement can be entered into by parties for the purpose of their undertaking due diligence or to protect confidential information during preliminary discussions, which could later lead to the parties entering into an agreement containing confidentiality obligations.  In the absence of a non-disclosure agreement, due diligence or preliminary discussions may not take place.  For example, a merger/takeover or the sale of a business.

5.       A court is unlikely to protect as confidential a trade secret, document or information that the owner of that confidential information has failed to protect by entering into a non-disclosure agreement.  A court would also be more likely to grant relief to an owner of confidential information in circumstances where the owner has attempted to protect that information from being disclosed.

Conclusion

If you would like to speak with one of our lawyers about reviewing or drafting your disclosure agreement, contact us on 1300 544 755 to get a free quote today.

Lachlan McKnight
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