What Is a Vendor Confidentiality Agreement?
A vendor confidentiality agreement is a contract between a vendor and an organization, where one or both parties agree to keep certain information confidential.3 min read updated on February 01, 2023
A vendor confidentiality agreement is a contract between a vendor and an organization, where one or both parties agree to keep certain information confidential. These agreements may also be called non-disclosure agreements.
The following samples show the types of information a confidentiality agreement may cover.
Sample of a Vendor Confidentiality Agreement: Healthcare Industry
One party entering into the agreement gives understanding that he or she needs certain information to do their job.
The information they agree to keep confidential may include, but is not limited to, the following:
- Patient information
- Student information
- Employee information
- Financial records
- Business operations
Some of this information is legally protected, such as health information. Confidential information can be in any form, including oral, overheard, written, observed, or electronic. Access to confidential information may be granted on a need-to-know basis. “Need-to- know” includes information necessary for performing the job.
The party agrees not to disclose confidential information to family members, friends, patients, coworkers, or anyone else without permission from the organization. The party also agrees to protect the confidentiality of all confidential information while at the company and after leaving the company.
The confidential information is the company's property and may not be kept by or removed by the party without express permission of the organization.
If the vendor violates the agreement, he or she is subject to adverse action, which includes losing the ability to work at or on behalf of the company. The vendor may also be subject to civil or criminal penalties.
Vendors agree to be bound by the contract, with an understanding they have read the agreement and understand the terms. They then sign and date the agreement.
Sample of a Vendor Confidentiality Agreement: Non-Disclosure
Business A states that their business depends on the free flow of information as well as its ability to withhold confidential information. Clients and vendors may ask Company A to agree to non-disclosure or confidentiality agreements before they provide any confidential information.
What are typical situations that call for NDAs, and what's the policy and process to deal with these types of requests? It will depend on the vendor and organization. Companies may outline policies for written versus verbal agreements, as well as situations in which they won't agree to NDAs.
Company A's policy is not to agree to NDAs, as it wants its analysts to have the ability to freely use any information they obtain outside of client services. The company may make exceptions to the policy if a vendor identifies certain information as particularly sensitive yet vital to understanding the context of a service, product, or other aspect of the vendor's business.
Confidential disclosures must be specifically identified and kept as narrow as possible. When any exceptions are made, the company's NDA documents may be used because it allows the company to limit the NDA's scope to specific information obtained in the vendor briefing.
During a vendor briefing, a vendor may ask participants from Company A to verbally agree to keep certain information confidential. If participants agree to keep this information secret, on an “off the record” basis, the vendor has to be very clear which information is confidential.
Parties may agree to certain terms for verbal agreements, such as recognizing the validity for no more than 30 days after the briefing. Otherwise, they should specify the time limit in writing.
When No NDA Will Be Signed
In some cases, confidential information that's exchanged between parties has coverage in a Master Client Agreement and the confidentiality terms contained in it. Due to this blanket coverage, there's no need for parties to enter into another confidentiality agreement.
The client has the responsibility of identifying information as confidential or not.
Confidentiality and non-disclosure agreements are designed to protect businesses as well as vendors. Breaching such contracts can have costly legal consequences. Know what you're signing before you agree to any terms.
If you need help understanding all the legal language and provisions in a contract, consult with an attorney who's experienced in contract law. That way, you'll be informed and protected from any adverse legal actions in the future.
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