Top Five Reasons Your Business Needs A Confidentiality Agreement

Updated: Nov 7, 2021

A confidentiality agreement protects information exchanged between two or more parties. It allows the holder of information to prevent another party from disclosing or using that information. Confidentiality agreements are most commonly applied between employers and employees, but they also apply between businesses.

Top Five Reasons Your Business Needs a Confidentiality Agreement:


Number 1: The success of your business depends on certain non-public information.

Your business most likely possesses trade secrets or special strategies that set it apart from your competitors and make you successful. One way to protect your success is to enforce a confidentiality agreement upon anyone who becomes privy to your secrets or strategies.


Number 2: You want to freely exchange information during meetings and negotiations with other businesses.

When you are considering a deal with another business, confidentiality agreements allow you and the other business to exchange information with the assurance that all information will remain protected. This allows for a more open and honest interaction that helps you make a more informed decision.


Number 3: You want to prevent disgruntled former employees from jeopardizing your business.

It is not uncommon for former employees—especially disgruntled ones—to attempt to capitalize on secrets or strategies they learned from your business. A confidentiality agreement carries the full force of the law to prevent former employees from threatening the stability of your business.


Number 4: You want to clarify what information is indeed confidential.

You exchange countless information with employees or other businesses each day. Having a confidentiality agreement helps you clarify which specific information must be kept confidential as well as emphasize the consequences of breaching confidentiality. Such clarification and emphasis can help you protect your information more effectively.


Number 5: You want to establish trust.

Exchanging a confidentiality agreement with another party implies that you trust the other party, and vice versa. The trust between the parties can help you pursue your goals more smoothly and efficiently.


How can you ensure your Confidentiality Agreement is enforceable?


Confidentiality agreements need to meet various requirements to be enforceable.

One of the most important requirements is as follows:


The information to be protected is unavailable to the public – Only information that your business already makes efforts to protect can be subject to a confidentiality agreement.


For assistance in drafting confidentiality agreements or questions regarding relevant laws and requirements, contact Brinkley Law at any time at 317-643-1813.

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