CONFIDENTIALITY AND NON-DISCLOSURE terms are essential in safeguarding a business or individual’s confidential and proprietary information and trade secrets, and can be triggered at various stages of a transaction, including preliminary discussions and negotiations or at the time the parties enter a definitive agreement.
Confidentiality agreements take varying forms, depending upon the nature of the relationship; the parties’ intentions; and the volume, sensitivity, and value of the information being furnished. Confidentiality obligations can be incorporated into commercial contracts or entered on a stand-alone basis. Confidentiality agreements will usually be enforced in California, even in cases where the proprietary information being protected does not constitute a trade secret.
Parties often need to protect their sensitive information even before entering into a contractual relationship with another party, such as when evaluating business opportunities, conducting due diligence, or soliciting proposals from vendors. When entering into a confidentiality agreement in advance of a potential transaction, ensure the confidentiality terms will be binding on the parties, even if the parties do not proceed with the contemplated transaction or the document includes other terms that are not binding. The confidentiality document can also be subsequently incorporated into an agreement specifically by reference. Alternatively, it can be drafted as binding until such time, if ever, that the parties enter into a superseding confidentiality agreement that specifically renders the prior agreement null and void.
Regardless of the type of transaction at issue, enter into confidentiality agreements as early as possible and certainly before any confidential information is ever disclosed by the client. In instances where a client has disclosed confidential information before executing a confidentiality agreement, the agreement should specifically reference and cover such prior disclosures.