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Non-disclosure agreements are vital for ensuring your sensitive information is not used inappropriately.

The first thing to be clear on is that there is no difference between a non-disclosure agreement and a confidentiality agreement; these are just two different phrases which are used to describe the same thing.

The idea behind the early signing of a non-disclosure agreement is to ensure that when two or more parties meet to discuss a potential contract, they are free to reveal commercially sensitive information whilst being assured that the other parties involved will keep this information confidential. This allows for a free discussion and sharing of ideas prior to a formal contract being agreed. Once these discussions are concluded they should be summarised in a Heads of Terms document, which we’ll be looking at in the next article.

Non-disclosure agreements are very simple contracts as they only have one purpose. This is to underline and give contractual protection to confidential information. That said, they do come in many different forms (some are to the benefit of only one party and some benefit all the signatories) and various lengths. Whilst it is easy to take these common documents for granted, occasionally they do contain clauses which should cause some concern or at least be questioned.

Things to consider before signing non-disclosure agreements

We advise that you should always use a non-disclosure agreement when entering into commercially sensitive discussions and you should have your own precedent that you can use and you are happy with. If this is drafted on a fair and balanced basis then it sets a good precedent for the negotiations and should be easily accepted by whoever you wish to discuss things with.

If, however, you are presented with a non-disclosure agreement to review, we recommend that if you do identify anything which you consider to be out of the ordinary or which requires further clarification, we would advise you to get in touch directly before signing the document.

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