Confidentiality agreement refers to the legal consensus arrived at by two parties related to each other via business terms and conditions. This agreement makes sure that the parties do not reveal information about each other during the course of their business relation. This assurance is made by strictly decoding the litigation that one party can slap on the violating party. The parties are free to arraign each other if the expected level of secrecy condition is not met. It is not only an external pressure on the parties to guard information but also an occupational duty of the parties to protect each other.
Due to revelation of a company’s strategies or work methods, the profit holding of the company may gradually slacken as the competitors or opponents in the market become alert and change their plans, thus creating a sticky situation for the original company in question. This type of a situation is detrimental for a company where a confidentiality document plays an indispensable role in fortifying the business empire.
The generic outline of a confidentiality agreement is provided below along with the specific functions each component of the article serves in maintaining the secrecy of the information:
- Business Situations: The agreement is uniquely represented in each of the business situations like employee confidentiality agreement, transaction confidentiality agreement, asset confidentiality agreement and client confidentiality agreement to fulfil the requirements of each situation.
- Information: The information required to be kept in close inspection are generally technical, financial and professional in nature which takes care of the fact that the technical, financial and professional aspects of the trading details are not learnt by outside business firms.
- Laws of the government: This document is a means to preserve the patent laws of the US government which makes certain rules regarding disclosure and non-disclosure of business information in general. Certain degree of secrecy is made mandatory by the state itself for constancy and stability in entrepreneurship.
- Definition of confidentiality: It is very important that the definition of confidentiality and its implications are properly laid out as the parties should be absolutely confident of what amount of information and what length of time the information has to be withheld from outsiders.
- Legal Penalties: The legal penalties deserve a mention in the document that the parties will be indicted with in case of failure to keep the required information confidential. The disclaimer has to be duly signed by the parties taking the entire responsibility of the consequence of the statement.