The confidentiality agreement designates a contract which makes it possible to protect against the disclosure of sensitive information. It is therefore recommended to use it with business partners as well as with employees. This agreement is essential and can commit the parties to reciprocal obligations, however it can also be unilateral. In the event of non-compliance with the confidentiality agreement, there may be significant criminal penalties.> Download: Strategic Planning Kit for Businesses” align=”middle”/>
Confidentiality agreement: definition
The confidentiality agreement, also called non-disclosure agreement or NDA for “Non Disclosure Agreement”, designates a commitment not to reveal certain confidential and sensitive information of a company. It is about an obligation of result, ie an obligation not to do.
This commitment is often provided for in business relations when confidential data is exchanged between the various stakeholders. The confidentiality agreement prevents a participant from benefiting from a competitive advantage. He cannot use the information for his own account or pass it on to a third party. Indeed, the confidentiality agreement can be signed in the context of the contractual relationship between business partners or when the parties do not yet know the outcome of the negotiations. For example, an important strategic decision or a future merger with another company may be subject to a confidentiality agreement.
The confidentiality agreement can be unilateral, i.e. only one party must remain silent, or bilateral, i.e. the parties have a reciprocal obligation of silence regarding sensitive data.
Why sign a confidentiality agreement?
A person who signs an NDA undertakes to respect the confidentiality of certain data. This agreement secures the commitment by avoiding legal hazards and reinforces deterrence.
The confidentiality agreement contractualizes confidentiality, because it highlights sensitive information not to be communicated. It is important to put everything in writing so that the stakeholders agree not to reveal this information. Such a confidentiality clause can be inserted into a contract. This obligation of result has a protective action by its obligation not to do.
In the event of non-compliance with the confidentiality agreement, the non-compliance with the clause must be proven by the existence of a disclosure and the contractual breach of the agreement. The NDA makes it easier to incur contractual liability.
What are the terms of a confidentiality agreement?
The confidentiality agreement is a contractual freedom so special attention must be paid to the drafting of the NDA. Indeed, a confidentiality agreement must contain certain specific information.
- The identity of the co-contractor and of the contractor.
- The parties concerned by the prohibition of disclosure.
- The nature of the obligation.
- The scope of the confidentiality agreement with the list of confidential information.
- The persons authorized to receive the information.
- The duration of the commitment.
- The sanction in the event of non-compliance with the obligation not to do.
It is also necessary to write a preamble to introduce the words and clauses of the non-disclosure agreement, which can help the court in the event of a dispute.
Purpose of the confidentiality agreement
The confidentiality agreement contract specifies the information not to be disclosed and the information that may be disclosed. However, it is unnecessary to specify in the scope of the data previously known by the signatory of the confidentiality agreement.
There are several possible solutions for drafting a confidentiality agreement. In particular, the editor can provide for a rather wide scope of application so as not to forget sensitive data. For example “This confidentiality agreement covers all information that is the subject of an exchange between the parties”. However, this option is very risky. Quite restrictive, it can slow down relations between the parties. In addition, case law requires clear and precise determination of confidential information. It can also refuse to apply a sanction to a contract that is too generic.
It is also possible to specify the protected information in an appendix to the confidentiality agreement contract. Be careful, however, not to forget data, not to mention that it is often complex to anticipate the data exchanged in subsequent commercial exchanges.
Finally, it is possible to leave the possibility to the parties to determine the confidential nature or not of the information throughout their relationship.
In general, two contracting parties have a reciprocal obligation to respect the confidentiality agreement. In this case, it is a question of a bilateral agreement, but this agreement can also be unilateral when there is only one contracting party subject to the clause. In any case, both parties must sign the confidentiality agreement.
The clause may also extend to third parties in the event that this is specified in the confidentiality agreement contract.
To protect the interests of the co-contracting party subject to the obligation of confidentiality, a list of persons to whom he can communicate confidential data must be provided. Indeed, he may need to share this information within a restricted framework. There is an alternative which consists in imposing the confidentiality agreement before the communication to a third party. The recipients must then also respect the obligation of confidentiality.
It is essential to specify a duration clause in the confidentiality agreement, because the absence of duration means that the contract is concluded for an indefinite period. The law authorizes the parties to terminate a contract of indefinite duration at any time while respecting a reasonable notice period otherwise the confidentiality agreement is considered useless.
It should be noted that in general the duration of the obligation is between 2 years and 10 years from the signing of the confidentiality agreement.
Penalty for non-compliance
In order to accentuate the dissuasive effect of the confidentiality agreement, a penalty clause must be included. In the event of non-compliance with confidentiality obligations, it must be specified that the co-contractor must pay the amount as determined in the contract.
In the absence of this penalty clause, the beneficiary of the confidentiality agreement must act on the basis of contractual liability. He must therefore prove the disclosure of protected information to obtain damages from the court for the contractual breach of the confidentiality agreement.
You should also know that judges differentiate between the regime of the obligation not to do and the regime of the obligation to do.
In the case of the obligation of result (obligation not to do), there is no need for proof of damage to be sanctioned. Instead, the company will use the phrase “Mr. Y undertakes not to disclose the information…”.
In the case of non-compliance with the obligation of means (obligation to do), the beneficiary of confidentiality must prove his prejudice. The company used the phrase “Mr. Y undertakes to keep the information confidential…”. The so-called obligation of means consists for a person to make every effort to achieve compliance with the obligation.
The fact of not respecting the commitment of confidentiality is sanctioned by a penalty clause, attached to the non-disclosure agreement.
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