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How to Create a Confidentiality Agreement

A confidentiality agreement helps someone protect their confidential information or trade secrets and prevents others from using it for their own benefit. This agreement uses a broad definition of "Confidential Information" and "Trade Secrets" to ensure any and all proprietary information stays secure. Our confidentiality agreement template includes the following provisions and options:

  • Prevention of any reverse engineering by the Recipient
  • The requirement for the Recipient to disclose any and all conflicts of interest
  • The obligation to protect against the unauthorized disclosure and theft of confidential information or trade secrets by third parties
  • The Discloser’s ownership of all intellectual property created by the Recipient as a result of receiving the confidential information, including copyrights, trademark, and patent rights
  • Options to include an arbitration provision as well as fully customizable clauses to reflect the full intentions of the parties

Party Information

To start, you will name the party that will be disclosing the confidential information (called the “Discloser”) followed by the information for the Recipient of the confidential information. A party can be an individual or business entity, but be sure to give each party’s full legal name.

Effective Time Period

Next you will specify when you want the confidentiality agreement to go into effect and for how long you want the Recipient’s duty of confidentiality to last. Often, the Recipient’s duty is made to last indefinitely so that the Discloser doesn’t have to worry about its secrets getting revealed after it stops doing business with the Recipient. This means that the Recipient will be required to maintain confidentiality even after the termination of any business relationship between the parties. If this seems unreasonable under the circumstances, the parties can always opt for a shorter time period.

Warranty Disclaimer and Arbitration

After that, you will need to specify whether or not the Discloser wants to disclaim all warranties concerning the confidential information. This means that the Discloser won’t be held liable should some of the confidential information or trade secrets communicated to the Recipient turn out to be erroneous or should the Discloser end up not using the information as planned. Typically, the Discloser will choose to disclaim all warranties unless express promises were made to the Recipient as to the accuracy or future use of the information.

The parties will also have the option of requiring disputes to go to binding arbitration instead of through the court system. This allows the parties to resolve disputes a lot faster and for a fraction of the cost of going through court. If a dispute occurs, it will be submitted to either a single arbitrator or an arbitration panel in the city chosen in the agreement. For these reasons, it is usually a good idea to include an arbitration provision unless you have a specific reason not to do so.

Final Matters

To finish, you will select which state’s laws you wish to govern the agreement and enter any other additional terms you want to include. Usually, the governing state is wherever the Discloser’s principal place of business is located. You can also use the Discloser’s state of incorporation or the state where the two parties primarily conduct business together. Then add any other terms and conditions desired.

You have total flexibility to tailor the document to reflect the specific circumstances and intentions of the parties. Be sure to preview the agreement first before adding extra terms so that you know what is already in there. After that, just follow the instructions at the end of the document to formally execute it and make sure that all parties get a copy of the final version. Hooray, you’re all done!

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