To protect the interests of your North Carolina corporation or small business and keep truly important information confidential, you might not want to share any information. That hesitation is understandable; it is not uncommon for others to use that information for their own benefit. But how would your business grow? Third parties include sub-contractors, distributors, suppliers and more and sometimes you have to share valuable information with them. So maybe the better question is how do you share that information but still protect your North Carolina corporation or small business? The answer is the signing of nondisclosure or confidentiality agreements. In order to increase the profitability of a business third parties have to be involved and so do nondisclosure and confidentiality agreements. These agreements can allow the business or entrepreneur to share information with a third party and assure them that the information will remain confidential. By signing it you are legally bound to keep the information a secret or face legal and sometimes significant repercussions.
What kind of information would you want to keep confidential?
The most valuable information you would want to keep secret are the foundations of your business; your “Trade Secrets.” Those items include customer lists, pricing information, patents and patent applications, software source documents and more. Trade secrets give you an edge on the competition and are vital to the success of your business.
What makes up a Confidentiality or Nondisclosure Agreement?
There are 2 types of confidentiality or nondisclosure agreements.
- Unilateral agreement: The company owner presents the agreement to a third party requesting that they keep the information confidential, but the owner is not required to do the same.
- Mutual agreement: Both parties agree to maintain confidentiality.
You can make verbal or implied nondisclosure agreements but these relationships are much more difficult to prove than a relationship based on a written agreement. To enforce a confidentiality or nondisclosure agreement it is crucial that the agreement be in writing in case of a future dispute. When drafting an agreement there are 5 important elements to include:
- A complete definition of the confidential information – this states what confidential information is to be protected by the agreement.
- Detailed exclusions from the confidential information – because not all information is confidential this explains what information that is and makes it so the party or parties are not obligated to protect it.
- The obligations of the receiving party – this clearly states that the receiving party must keep the information confidential and sets forth the limitations of its use.
- The length of time the agreement is valid – this states the time period in which the receiving party has to keep the information confidential.
- Other miscellaneous provisions – this is included at the end of the agreement and explains what happens if the agreement is breached; consequences, dispute negotiations, attorney fees, etc.
Confidentiality and nondisclosure agreements are incredibly important for the security of some businesses. Because this information should remain confidential and not be used to compete with other business interests, the drafting of these agreements should be done by an experienced business attorney. The attorneys at Fisher Stark, P.A. have drafted numerous confidentiality and nondisclosure agreements that have helped protect our client’s assets and keep them out of court. If you are in need of confidentiality or nondisclosure agreements, or if you have any other business concerns call us today at 828.505.4300.
Last updated 7/5/2015