Confidentiality Agreement

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What a confidentiality agreement is and why it matters

A confidentiality agreement, also known as a non-disclosure agreement, is a contract under which a party agrees to keep specified information confidential and to use it only for agreed purposes. It may be one-way, where one party shares information, or mutual, where both do. It can stand alone or sit within an employment contract or other agreement.

Its purpose is to protect sensitive information — such as commercial, technical or personal data — while allowing it to be shared for a defined reason. For the disclosing party it sets clear limits on use and onward sharing; for the receiving party it makes plain what must be protected and for how long.

When a confidentiality agreement is used

• When an employee or contractor will handle sensitive information.
• Before sharing confidential details during recruitment or negotiations.
• When exploring a partnership, project or transaction.
• To protect commercial, technical or personal information shared for a purpose.
• As a standalone document or as a clause within a wider contract.

What a clear confidentiality agreement includes

• The names of the parties and whether it is one-way or mutual.
• A clear definition of what counts as confidential information.
• The permitted purpose for which the information may be used.
• Obligations to protect the information and limit onward sharing.
• Any exclusions, such as information already public or independently known.
• How long the confidentiality obligations last.
• What happens to the information when the purpose ends.
• How the agreement is governed and how disputes are handled.

Common mistakes to avoid

• Defining confidential information so broadly that it is hard to apply.
• Failing to state the permitted purpose for using the information.
• Leaving out standard exclusions, such as information already public.
• Not setting a clear duration for the obligations.
• Overlooking how information should be returned or destroyed at the end.
• Using a generic template without checking it fits the situation.

Best practices

• Define confidential information clearly and proportionately.
• State the permitted purpose and any sensible exclusions.
• Set a clear duration appropriate to the information involved.
• Explain how information is returned or destroyed when no longer needed.
• Export the signed agreement to PDF so the obligations are fixed and easy to share.