A Confidentiality Agreement generally is used when there is any type of sensitive or private information that is being disclosed where the person who is disclosing the information does not want that information to be disseminated to anyone.
Common reasons for requiring confidentiality is because the information that is being disclosed is a trade secret or something the person may not want the public or other people to know. Other common scenarios are when possible business plans are being discussed, again information in these plans or perhaps potential partnerships may contain important trade or financial information.
Furthermore, confidentiality agreements are commonly used when a person has an idea for an invention that has not yet been patented, it is a wise idea to have the person to whom the idea is being disclosed to sign a confidentiality agreement to ensure that the information will remain only with this person and will have a duty to ensure other people do not either access or find out. The latter highlights that confidentiality agreements are not only used in the course of employment, but also between individuals.
The nature of the work conducted and the information provided will ultimately determine the appropriateness and the terms of the confidentiality agreement. A confidentiality agreement for working in a medical practice for example will have different aspects and requirements than one where there are trade secrets. Ultimately, the nature of the information and the extent of the information will define the agreement.
Confidentiality Agreements can last indefinitely …
The obligation in confidentiality agreements to keep the information confidential in many cases may last indefinitely, but the time that the information must be kept confidential may be varied by the agreement itself. It is important to note that the duty to keep information private in confidentiality agreements typically last beyond employment.
The scope of the agreement can also vary to include any information gained during employment or specific information that, for example, was disclosed in a meeting or sent by a client. An industry and the nature of employment will determine the scope of a confidentiality agreement and if one is needed. For many employers having a confidentiality agreement in place gives them piece of mind that information an employee is exposed to will not be disclosed to others.
Once an individual enters into this type of contract they then have an obligation to ensure they do not release the information they gain to anyone and this obligation is on-going even after employment ceases. If they do release information they will be liable to the individual or company to whom the confidential information belongs for any loss or damage suffered as a result.