Information is power.
If all the businesses had the x factor (the information advantage), all business would be successful, but this is certainly not the case. Business is successful for various reasons, visionary leadership, strategic assets, low prices, expertise or a combination of the above and in some instances the information, secrets, intellectual property, know how, and data gives the edge.
A confidentiality agreement is simply a contract between two or more parties where the subject of the agreement is an obligation that information conveyed will be maintained in secrecy.
Businesses enter into confidentiality agreements before they negotiate partnerships, alliances, ventures, mergers and the like. These agreements are rarely read let alone understood and then signed. The then signed agreement is then thrown into the bottom drawer and then the beans are spilled.
Rule No. 1 always be cautious, even if you have entered into a confidentiality agreement of what information is provided to whom, you cannot simply erase the human mind once it has acquired knowledge and information.
Rule No. 2 ensures that you have a proper confidentiality agreement in place which covers all the entities in the case of a group, where applicable.
Rule No. 3 beware of “generic agreements” know what you want to protect and ensure the agreement covers that.
Confidentiality agreements should not only be entered into with third parties, it must also form part of the terms of the employment agreements of key staff, consider the following:
- Restrained of trade (non compete) terms
These terms prevent key employees from working in your industry within a specified geographic area and within a specified time of their departure from your company.
- Non Solicitation terms
These terms prevent departing employees from soliciting your customers and your other employees to leave your company.
- Confidentiality terms
These terms are used to protect trade secrets, processes, sensitive company information (such as customer identities, financial information, and the like), and company plans.