Confidentiality Agreement – What you Need to Know

August 24, 2018

Confidentiality Agreements, or Non-Disclosure Agreements (NDA’s), consist of similar ingredients which set out the terms that define the disclosure of confidential information. Depending on whether you are the owner of the confidential information or the recipient of it, the focus in which a confidentiality agreement is viewed varies, like two sides of the same coin. It is important to understand the obligations involved in disclosing and receiving confidential information, as well as the scope of the agreement in question.

As a first step to an NDA, the confidential information needs to be defined. The Disclosing party will attempt to insert a broad definition of confidential information in to the agreement, to make sure the other side does not exploit their valuable information. The recipient will want the confidential information to be given a narrow definition, excluding oral communications for example, and requiring the confidential information to be marked as such to be considered confidential under the agreement.

The recipient will want certain exclusions inserted into the NDA. This is imperative, as a blanket NDA with no exclusions may very well leave the recipient in trouble; the NDA being in force on the one hand, and the possible scenario of a court or regulatory body requesting the information on the other. Furthermore, if the information becomes public through no fault of the recipient, or if the information is received from a third party, the NDA will still apply unless those exclusions are explicitly mentioned in the agreement.

The common exclusions include information that is:

  • Already known to the recipient
  • In the public domain through no fault of the recipient
  • Independently developed by the recipient without reference to or use of the confidential information of the disclosing party
  • Disclosed to the recipient by a third party who has no duty of the confidentiality to the disclosing party
  • And others, based on the circumstance.

There is a perceived notion that NDA’s are hard to enforce as they are a restraint of trade; they limit an employee’s ability to earn a living following dismissal. For this reason, they need to be carefully drafted to be enforceable. They must be necessary to protect a legitimate proprietary interest of the discloser and must not be overly broad or unnecessarily onerous.

A competent business lawyer can assist in tailoring a confidentiality agreement to fit your business needs, or review one that was given to you, to advise on the legal and practical ramifications involved in signing an agreement. We can help you understand your rights and obligations, and assist in highlighting and negotiating the elimination of burdensome or unacceptable provisions in an agreement.

Contact Charney Legal, your business and employment lawyers.

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The general information on this page is not applicable to any specific case and is intended for information purposes only. It is not a substitute for legal advice and may not be relied on as such.

Readers are expressly advised to consult with a qualified lawyer for advice regarding their specific circumstances and entitlements under Ontario law.

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