What clauses should be included in a confidentiality agreement?

Last week we published an article about the confidentiality agreements and the type of information that was protected under these private contracts. Today we will look at what clauses to include in this document.

To summarise, it is important to include the following agreements:

– That the information is not disclosed to third parties.
– That, should the negotiations prove unsuccessful, the information shall not be used for personal gain by the party that became aware of it as a result of the negotiation process.
– That the negotiation process or discussions themselves are confidential.
– The manner in which information is provided is regulated.
– The consequences of breaching the duty of confidentiality are set out.

In any case, it must be said that there is no single model confidentiality agreement that is valid for every situation, and that it is a document that must be tailored to the circumstances of each case and, above all, to the needs of the parties involved (whether or not they have identified the confidential information; whether the other party is someone who could use that information for commercial purposes or is merely an investor; whether the information or trade secret is protected or not, etc.).

In what situations is it advisable to sign a confidentiality agreement?

The situations in which it is usually necessary to sign this type of agreement include the sale and purchase of shares or assets in a company; joint ventures; in negotiations for an investor to acquire a stake in a company through a capital increase (in funding rounds, for example); in takeover bids (Public Takeover Bids); when entering into distribution or supply agreements; or when developing a new business model or a patentable invention and requiring a supplier or service provider, to cite the most common examples.

Generally speaking, in any case where information is disclosed that is sensitive to one of the parties involved in the negotiations, this agreement must be signed; and, as we have said, this must be done before any discussions begin.

Sometimes, the competitive advantages that can be gained in the market, or indeed the very viability or success of the business in question, depend on safeguarding this information.

Anna Compte
anna@aurisadvocats.com

Specialties:
Commercial
Civil contracts
Corporate disputes