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Keeping your Business Confidential

When should you put in place a Confidentiality Agreement?

Commercially sensitive Information as to the operation of your business is a valuable business asset which you should protect.

If you are in talks with a third party because you are considering a joint venture or some other commercial working arrangement or perhaps looking to sell your business you need to ensure that information is protected; the first step will be to put in place a confidentiality agreement.

Not only will the agreement give legal protection it also emphasises to the other party that you consider the information sensitive and valuable and that you are serious about protecting it.  It therefore in itself acts as a deterrent.

Will a Confidentiality Agreement give full protection?

Whilst a written confidentiality agreement is essential it is not the whole answer to protecting your confidential business information.  You must take practical steps on an ongoing basis to ensure confidentiality is maintained and to ensure that you can, if need be, take action against the other party for breach of confidentially.  These are some of the key practical steps you should be taking:

  • restrict access to confidential information
  • be selective as to what you disclose
  • mark confidential information as confidential
  • make sure employees understand the importance of maintaining  confidentiality.  Ensure employment contracts contain clear confidentiality provisions but also document to employees, on an ongoing basis,  the need to maintain confidentiality during dealings with a 3rd party.  Be clear as to the scope of what that may be passed
  • record what information was passed and when (make sure employees do likewise) .

Buying a a Confidentially Agreement off the Internet

Should you take legal advice in relation to a confidentiality agreement?  The difficulty with buying a ready made confidentiality agreement (for example, off the internet) will be in ensuring definitions in the agreement are relevant and clear, for example:

  •  the description of the confidential information to be protected must accurately record the nature of information to be disclosed.  It will also need to cover deliberate or accidental disclosure of information.   If not, your legal protection will be diluted or lost
  • why the information is being provided for example, for an interested party to assess whether to enter into a joint venture with you or for a potential purchaser to make an assessment as to whether they are interested in buying your business
  • detailing when the other party might be permitted to disclose the confidential information to others such as their or solicitor or accountant. 



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