Mutual Disclosure: Everything You Need to Know
Mutual disclosure is an agreement between two or more parties where it is agreed not to share confidential information for a certain period of time or indefinitely. 3 min read updated on January 01, 2024
Mutual disclosure is an agreement between two or more parties where it is agreed not to share confidential information for a certain period of time or indefinitely. These types of agreements are frequently included with employment contracts when a company has trade secrets to protect.
What Is Mutual Nondisclosure?
Confidentiality is a huge part of life, and there are many cases in which it is of the utmost importance. Issues of nondisclosure can come up in both personal lives and the business world. We all have information that is private, and we would like it to remain that way, but we can't always assume that desire will be respected.
Mutual disclosure agreements can be put in place to help ensure that your information is kept private, rather than simply taking someone at their word. Confidentiality agreements are the best way to protect any personal or business information that needs to be kept secret.
Confidentiality agreements go by a few different names, including:
- Mutual disclosure agreement
- Mutual nondisclosure agreement (mutual NDA)
- Nondisclosure agreement
- Confidential disclosure agreement
- Mutual confidentiality agreement
- Mutual Non-Disclosure Agreement Form
The agreement should clearly outline what information is protected by the contract and therefore cannot be shared with or sold to a third party. This is a legal agreement that must be signed by all parties involved in order to be enforceable. The parties involved in the agreement are linked by the information shared, which should also be outlined in the document.
Companies that want to protect the following types of information frequently use nondisclosure agreements:
- Trade secrets
- Confidential client or customer information
- Financial information
- Intellectual property
Any information that is not already known by the general public can be protected by a confidentiality agreement. The contract should also outline how certain information can be released with proper consent, if necessary. There should also be a clause included in the agreement to spell out the consequences of a breach of contract in the event that protected information is leaked, like who is held responsible for legal expenses and if any fines will be charged.
When To Use Mutual Disclosure Agreements
Mutual nondisclosure agreements are frequently used when two companies or entrepreneurs are thinking about going into business together or collaborating on a project. Both parties will need to be able to share information about their work without worrying about the other party taking and selling the information.
A confidentiality agreement is a good idea if:
- You plan to have access to sensitive information that belongs to someone else or another company
- You plan to share sensitive information with another individual or business
Mutual disclosure agreements can be used between two people, two companies, or a company and an employee, independent contractor, or consultant. Frequently, businesses want to protect the very information that first helped them succeed in their industry. People can use these types of agreements as well, even though it's not as common.
If two people create a recipe together, they can form a nondisclosure agreement to be sure that neither person shares the secrets of the recipe without the consent of both parties.
When two companies are collaborating on a new product, they can form a confidentiality agreement to ensure that the project is finished to the end without either party giving away secrets to another business.
NDA for Privacy
Mutual nondisclosure agreements can also be used for privacy. Inventors and entrepreneurs can use these agreements to protect their ideas as they formulate business plans or new products before they're finished. Privacy is very important when it comes to protecting your intellectual property (IP).
What Can Be Protected By Mutual Disclosure?
Only certain types of information can actually be protected by a mutual nondisclosure agreement. Any information that is considered public knowledge or is in a public record cannot be protected by a confidentiality contract, it may be included, but that part of the contract would be deemed unenforceable.
Proprietary information can be protected by a confidentiality agreement. Proprietary information is not common knowledge and is the intellectual property of an individual or company.
If the party you wish to share protected information with has already been told the information from another party, then you cannot protect it. You can only protect information that you yourself share.
If you need help with mutual disclosure, 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.