Issues in Confidentiality Agreements

Confidentiality agreements (also known as non-disclosure agreements) are a common tool utilized by businesses to protect their sensitive information. These agreements establish a binding contract between two parties, usually an employer and employee or a client and contractor, ensuring that any confidential information shared between them remains private.

While confidentiality agreements can be an effective means of safeguarding trade secrets and other sensitive information, there are several issues that can arise. Here are some of the most common concerns with confidentiality agreements:

Ambiguity: One of the primary issues with confidentiality agreements is ambiguity. The language used in these agreements can be vague or overly broad, leading to confusion and misunderstandings. For example, if an agreement states that an employee cannot disclose information about their employer “under any circumstances,” does that mean they can`t even discuss their job with friends or family members? Without clear and concise language, confidentiality agreements can be difficult to enforce.

Enforceability: Even when a confidentiality agreement is well-written, it may not be enforceable in court. Courts may find that certain provisions are overly restrictive or that the agreement as a whole is unreasonable. In some cases, courts may also find that the agreement is invalid due to some technicality, such as a lack of consideration (i.e. something of value given in exchange for signing the agreement).

Excessive restrictions: Confidentiality agreements often include provisions that go beyond protecting truly confidential information and instead seek to limit an individual`s ability to work in their chosen field. For example, an agreement that prevents an employee from working for a competitor for a certain period of time may be seen as overly restrictive.

Unequal bargaining power: In many cases, one party may have significantly more bargaining power than the other when negotiating a confidentiality agreement. For example, a small business owner may be forced to sign an agreement with a larger company in order to secure a contract. In these situations, the more powerful party may be able to impose unreasonable restrictions or negotiate terms that are not in the best interests of the other party.

That being said, confidentiality agreements can be an effective means of protecting sensitive information when used appropriately. To ensure that these agreements are enforceable and reasonable, it is important to work with experienced legal counsel to draft and negotiate the terms. Additionally, parties should take care to ensure that the language used in the agreement is clear and concise, and that the restrictions imposed are limited to protecting only the truly confidential information at issue.

In conclusion, confidentiality agreements can be a useful tool for safeguarding sensitive information, but they are not without their issues. Parties should approach these agreements with care, working to ensure that the terms are reasonable, enforceable, and limited to protecting only the most sensitive information. With the right approach, confidentiality agreements can be an effective means of protecting intellectual property and other valuable assets.