Difference Between NonDisclosure & Confidentiality Agreement
Nondisclosure and confidentiality agreements are quite similar, there are just subtle differences that come down to the specific industry utilizing it.3 min read
The difference between non disclosure and confidentiality agreement can create confusion as to which is which. While they are certainly quite similar, there are subtle differences that come down to the specific industry utilizing the agreement, not necessarily significant legal differences. Additional names for these terms include:
- Secrecy agreement
- Confidentiality agreement
- Proprietary information agreement
Ultimately, the name you choose for the document, confidentiality agreement or non-disclosure agreement, is more a matter of preference than anything else, as it is really the content of the agreement that matters, not so much the name.
For example, there are those who feel that a non-disclosure agreement is to be used in transactional matters, such as mergers or acquisitions (sometimes also known as, “buy-outs”), whereas a confidentiality agreement is meant for non-transactional matters. The latter could include business dealings such as contracting work or the performing of services.
These people may not be wrong, necessarily, but it ultimately comes down to the name of the agreement that the parties involved are choosing to use. In fact, some people or businesses will actually choose to use both terms within the context of the written agreement, perhaps to alleviate confusion as to whether or not they are considered to be the same thing.
What Is a Confidentiality Agreement or Non-disclosure Agreement?
If you are being asked to sign a confidentiality agreement or a non-disclosure agreement, chances are it is because you are going to have access to information that your company does not want to become public or shared with competitors. Additionally, they can be either unilateral or bilateral.
A unilateral agreement is when one party is being held accountable for not disclosing or sharing sensitive information. This is commonly the case with people like inventors, engineers, or chemists, but it can be for any position in which you may be creating something that your company wants to hold the rights to anything you create while on company time.
Additionally, many confidentiality agreements will also contain language that prohibits the employee from sharing any sensitive or proprietary information for a certain period of time, even after their employment with the company ends. It may also contain language regarding how long the employee cannot go to work for a competitor, generally within a certain mile radius.
Are there cases in which it may be the individual, not the company, who wants a confidentiality agreement in place? Absolutely. If, for example, you are inventor, and you are seeking investors to fund your project to bring your idea to fruition, then you may want to have the investors sign confidentiality agreements to ensure they do not steal your ideas for themselves or share them with other inventors. Assuming that the inventor does not have access to any sensitive information of the investor, such as financials, etc., then a unilateral agreement is generally still acceptable.
A bilateral agreement, on the other hand, is one in which both parties agree to keep confidential or proprietary information secret. Taking the previous example of the inventor, if the investor with whom business is being done has contributions beyond the financial, such as ideas for improvements, etc., then it would be wise for the confidentiality agreement to be a bilateral one. This way, the investor cannot take the ideas of the inventor and run with them, nor can the inventor take the thoughts or ideas of the investor and share with them other investors or inventors.
There are generally provisions included in bilateral agreements, to cover the possibility of a breach of the confidentiality agreement. Types of relief that may be included in the provisions include:
- Monetary damages
- Injunctive relief, which is meant to stop any further, unauthorized disclosures
- Instant cancellation of any current or future transactions between the involved parties
Non-disclosure agreements are often found in situations wherein personal or private information is meant to be kept secret from third parties or the general public. For example, if you are a well-known celebrity who hires a personal assistant, you may ask that individual to sign a non-disclosure agreement to ensure he or she doesn’t go on to sell a tell-all book.
Meanwhile, confidentiality agreements are generally the preferred terminology between parties that are on equal footing, such as between a company and an independent contractor or vendor.
If you need help with confidentiality agreements and non-disclosure agreements, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.