Are you an inventor or developer who wishes to approach
businesses in order to sell, distribute or manufacture your
discoveries? Have you met a potential partner? Are you getting
ready to negotiate the purchase or sale of a business or enter into
any other significant transaction? Does this potentially involve
the disclosure of strategic information or other confidential
information about your business?
The conclusion of a confidentiality agreement should be the
starting point of the business relationship. This agreement should
be signed even before you engage in preliminary discussions and
negotiations concerning the terms of the deal. Although a
confidentiality agreement is not foolproof, the fact remains that
using one can help you protect your business secrets and avoid
worry and expense.
Confidentiality agreements provide that the party to whom
confidential information is disclosed, the recipient, will keep it
confidential. It is all the more crucial to have such an agreement
in place when the party you want to negotiate with is a direct
competitor or someone who might appropriate your technologies,
ideas or confidential information for its own purposes.
NEGOTIATING THE CONFIDENTIALITY AGREEMENT
The negotiation of the confidentiality agreement is often part
of the initial contact with the other party and presents an
opportunity to assess how the other party approaches contractual
arrangements. Difficult negotiations at this stage of the
relationship should trigger an alarm. Such difficulties do not
necessarily mean that you should end the relationship, but they may
nevertheless prove to be indicative of the complexity of the coming
contractual negotiations and business relationship.
After reflection, you may conclude that the other party is not
the right partner for you and that its vision is incompatible with
THE CONTENT OF A CONFIDENTIALITY AGREEMENT
When negotiating and drafting a confidentiality agreement, the
parties should draw up a list of the information that will be
disclosed and its nature, for example, technical information,
financial data and customer lists, and accurately describe both the
information they wish to include in the confidentiality agreement
and the information that it will not cover. Be aware, however, that
only information which is truly confidential can be protected and
that information already in the public domain is generally excluded
from the agreement.
The remedies in the event of misuse or improper disclosure of
confidential information, particularly the injunction and right to
compensation, should also be set out in the agreement.
The term of the agreement should also be specified. Your
confidential information should not cease being confidential as
soon as the negotiations break down. Ideally, the confidentiality
obligation should never expire. The term of the agreement can vary
depending on the information disclosed, the nature of the business
and the parties involved, and will generally be between two and
MANAGING THE CONFIDENTIALITY AGREEMENT
Signing a confidentiality agreement does not mean that you are,
from then on, giving the other party unlimited access to your
confidential information. The party that wants to protect its
information should manage the provisions of the agreement
In this regard, to avoid confidential information from being
disclosed or improperly used, it is wise and strategic to limit
access to the people who truly "need to know" and to use
phased disclosure according to what is needed for the purposes of
the transaction, or the progress of negotiations. It is also useful
to write down a list of the information that is disclosed. If a
problem arises, this will make it easier to prove that specific
information was disclosed at a particular time. You should also
ensure that all confidential information and copies thereof that
your partner has made is returned to you or destroyed. It would be
troubling to discover that your confidential trade secrets have
been disclosed by your partner through inadvertence.
A well-kept secret can make the difference between success and
misadventure... Confidentiality agreements are often overlooked and
left out or, copied from the Internet to reduce the costs of legal
services. It is very important to read the provisions of any
pre-written or standardized agreement carefully prior to signing it
and have it drafted or reviewed by a lawyer who is well aware of
the specific context in which it is entered into. Doing so ensures
that you start your business venture on the right foot and cover
all the contingencies.
A confidentiality agreement protects your ideas and your
business. Take the step to make sure your business partners stay
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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