To develop a company project, you sometimes negotiate with potential partners. When you judge it necessary to keep those discussions private, you should let the people you are dealing with know about it. The national and international norms do not guarantee the confidentiality of trade and communications, but you can legally protect your ideas to minimize the risk of getting them stolen.
The confidentiality agreement
Economic players sign contracts to protect and respect the confidential nature of their exchanges. These contracts offer the possibility to punish partners who break the confidentiality of the discussions, agreements, and partnerships.
Some entrepreneurs, no matter what their size and form of exploitation are, resort to the “Non- Disclosure Agreement” (NDA).
The title given to your contract is not significant. These agreements secure the undertaken negotiations or, when they are integrated into a trade agreement, secure the exchanged data between the different stakeholders, most of the time with you and your partners.
These agreements should contain a certain number of clauses to be as efficient as possible:
– The affected parts
– The protected information (mails, contracts, emails, documents, patents, trademarks, business plans, transcribed mobile discussions, minutes of a meeting…),
– The extent of the agreement,
– The procedures of restitution of the documents and information
– and finally, the potential sanctions ( with mention of the applicable law and the competent jurisdictions).
How much time should the confidentiality agreement cover?
In general, negotiations start in an informal manner. Strategic information can be exchanged during a simple conversation. Also, you may put an end to your negotiations or your agreements in quite difficult conditions. For these reasons, determine the duration of your confidentiality agreement carefully. This one should cover all relevant exchanges as early as the start of the discussions, all the way to a future post-break period.
Take the period of time which will elapse after the end of the agreement, during which you do not wish for your partner to communicate any information to third parties, even the fact that he has been in negotiations with you, into account. If need be, you can extend your confidentiality agreement.
Methods of restitution
Anticipate the way in which the information and documents you have shared will be returned to you and at what time. In case the negotiations become aimless; your partner should not keep possession of the documents you have shared. It is advised to include a clause of restitution or destruction, with an obligation to prove the aforesaid destruction of the shared documents.
Should we prepare sanctions in case of non-respect of the obligations of confidentiality?
If the exchanged information is sensitive or strategic, develop a sanction in the event of its disclosure and /or of non-restitution. In the contract, it can take the shape of a criminal clause that fixes the amount of money to pay in case of violation. This clause often serves as a deterrent.
Entrepreneur Club and Vaughan Avocats