What is a Confidentiality Contract after all? – WAU
With so many technological innovations, the market has become increasingly competitive. It is necessary to attract the attention of consumers and investors. But, of course, without forgetting to protect the company itself. One way to ensure that the company is always remembered is to invest in marketing strategies. But sometimes, this can be […]
With so many technological innovations, the market has become increasingly competitive. It is necessary to attract the attention of consumers and investors. But, of course, without forgetting to protect the company itself.
One way to ensure that the company is always remembered is to invest in marketing strategies. But sometimes, this can be a difficulty.
This because the company is usually more concerned with the product itself than with the strategy of marketing to be adopted and, with that, destines a small amount for this sector.
Therefore, it is worth having the support of companies focused on content marketing.
But, another fundamental point to grow safely is the secrecy of the company’s secrets, both in terms of products and other strategies.
The disclosure of these secrets can lead to market loss, as the other producers will be able to compete with more knowledge about their product.
Thinking about it, we prepared this post about confidentiality agreement so you can protect yourself whenever you need to share confidential information with other companies.
Understand how it works, your objective and, finally, a contract model so that there is no doubt about it.
The confidentiality agreement is also known as a confidentiality agreement, in English non-disclosure agréments, or simply NDA.
The confidentiality agreement, or NDA, is a legal instrument that aims to protect industrial or trade secrets and confidential information.
These are secrets that are sometimes not protected by industrial property law, copyright law or the intellectual property law of computer programs.
Or, even if protected by one of these laws, the owner, for greater security and protection of the information, chooses not to register it, but just by signing the NDA with anyone who will have access to it.
The option for the NDA and not for registration can be explained because a patent is not eternal. After the maximum period of 20 years has elapsed, what was previously secret becomes information in the public domain.
This, in turn, can lead to a loss for the brand.
The confidentiality term can be perpetual or, at least, much longer lasting. Which makes trading safer.
These confidentiality agreements can precede strategic negotiations, such as evaluating a company or developing a product, commercial partnerships or even ordinary negotiations, such as making a purchase and contracting a service.
These are situations in which there is a need for one company to provide certain information to another to perform a service or even to quote from a supplier.
In any case, maximum attention should be paid to this contract, since an agreement like this has the purpose of protecting not only a project, but the very existence of the company.
After all, what would Coca Cola be like if everyone had access to the product formula that bears the brand name?
It is important to note that the intended confidentiality can be embodied in a contract, agreement or even a clause in an attached contract.
Like a clause in an employment contract, a service provision contract or a technology transfer contract, for example.
Specifics about the confidentiality agreement
As seen, the confidentiality agreement aims to protect information from an entity whenever, for some reason, it is necessary to share that information with another person or with another company.
Through the imposition of severe penalties, there is a constraint for the contract to be fulfilled.
In this context, the NDA, in addition to exercising a constraint, it facilitates the legal path in case of breach of contract, since fines and other penalties are already specified.
It is also interesting to remember that a confidentiality contract can be unilateral, when it requires only one party to keep the information conveyed secret.
How can it be mutual, when the two parties expose confidential information and determine that both keep the secret of others.
In addition, this type of contract can be concluded between legal entities or between legal entities and individuals, such as an employee or a service provider.
There is no impediment to signing this contract between individuals, is just less usual.
Given the importance of this contract, its preparation is not indicated when it is information in the public domain or even if it is not relevant to the organization of the company, as well as in trivial transactions.
However, if it is necessary to elaborate it, it must be written with extreme caution, avoiding generic terms and ambiguous expressions.
It must, therefore, be as clear and objective as possible and preferably written by a lawyer.
Tips for a good confidentiality contract
One of the most important clauses it is precisely to define who are the parties to the contract.
This is because, as seen, a confidentiality contract can be unilateral or bilateral if only one party or if both are sharing information.
In this sense, it must remain clear in the contract who is the recipient and who is the supplier of the confidential information, in order to remain determined whose obligation it is to maintain confidentiality.
Second, clarity about the object of confidentiality is essential. Protected information can refer to technology, business strategies, client portfolio, know-how and financial data, for example.
In this sense, it is necessary to specify the information to be protected so that there is no doubt as to what is being protected.
Therefore, in addition to the object of the contract, it is necessary to include in the term the use to which the parties are giving confidential information.
This means that it is important to specify what is the purpose for which that information is being provided and whether it is for just that purpose that it can be used.
Generally, a company’s secrets can be used for the preparation or evaluation of a proposal to acquire the company itself, the execution of a service or the development of a product, for example.
Likewise, it is interesting to note how this information will be exchanged, whether verbal, through the delivery of physical documents, whether they will only have access to the documents in the company itself or whether by electronic means.
Fundamental is also to include the period of validity of confidentiality, as well as the possibility or not of changes and extensions.
Finally, a confidentiality agreement, like any other, must provide for what jurisdiction it will be subject to in the event of an eventual legal impasse.
This includes specifying in which country, in which city and in which court the matter is to be tried, as the parties can choose an arbitration court.
Variations in a confidentiality agreement
A confidentiality contract can vary according to its object, according to the form of intervention in the agreement or even if it places greater or lesser emphasis on protecting information.
Thus, if the information to be protected is related to technology owned by the company, the confidentiality term will be longer than if the information relates to financial data.
This is because a lot of money is invested in the development of a technology and they are usually very profitable for the company, since financial data is constantly changing.
Likewise, it is important to be aware and write a clear and objective clause regarding the purpose of sharing protected information. It is not enough for the receiver to keep a secret, it is necessary to determine in which situation he can use that secret, under penalty of giving scope for misuse of information.
Other clauses can be added, as well as the collection of additional information according to the peculiarity of the project or the characteristics of a company.
It is up to the legal professional to identify these needs. An example of this is to state how the information will be stored by the receiver; which people will have access to the information; if copies are made, whether they will be destroyed after a certain period.
The parties may also include in the contract, accessory duty in order to avoid delays in fulfilling the obligation.
An example of an accessory duty is the determination to communicate to the information provider the occurrence of an event such as the non-destruction of a document, when it should have been done.
Another issue that can be considered in the contract is the adoption of an alternative forum, if the recipient of the confidential information resides in another country.
This adoption allows the filing of urgent precautionary measures in any of the countries with jurisdiction, facilitating the execution of the measure.
The jurist responsible for drafting the confidentiality contract is responsible for analyzing the variations and peculiarities according to the object and the degree of protection that must be given to the information being exposed.
One must be careful that a contractual failure does not jeopardize an entire business and the future of the company.
Model of confidentiality agreement
So that there is no doubt about everything that has been said on the subject, we are bringing a model of a confidentiality agreement.
But remember, this contract may vary according to its purpose. This model should only guide you and does not replace the guidance of a professional.
IN BETWEEN CÉU AZUL LTDA, legal entity of private law duly registered with CNPJ under number 00.000.000 / 0001-00, with headquarters at Rua Azul, nº 88, Bairro Cristal, CEP 00000-001, city of Cristaleira – SP, London, represented by its managing partner Fulano de Tal, registered with the CPF under number 000.001.002.03, hereinafter referred to as SUPPLIER; and, on the other hand, CÉU LILÁS LTDA, private legal entity duly registered with CNPJ under number 00.000.000 / 0001-02, with headquarters at Rua Lilás, nº 88, Bairro Sol, CEP 00000-002, city of Soleira – SP, London, hereby represented by its managing partner Sicrano de Tal, registered with the CPF under number 000.004.005.06, hereinafter referred to simply as RECEPTOR.
that the parties have the purpose of exchanging different information in order to execute the service contract signed and which is attached;
whereas the parties intend to establish rules for the disclosure of information, some of which are confidential, as well as to define how that information can be used and should be protected;
whereas, the parties are free to decide whether or not to disclose confidential information to the other party.
that the SUPPLIER Party is willing to provide information, some of which is confidential;
The parties agree to the following terms and conditions:
CLAUSE ONE – OBJECT
The object of this contract is the protection of confidential information provided by the SUPPLIER due to the signing of a service provision contract with the RECEPTOR.
SINGLE PARAGRAPH: The RECEIVER may only use the confidential information shared by the SUPPLIER for the provision of accounting services contracted by the SUPPLIER, whose contract is attached as attachment 1.
SECOND CLAUSE – DEFINITIONS
For the purposes of this contract, any technical information obtained by the RECEIVER due to the service contract signed with the SUPPLIER and related to the operation, project, organization, specification or performance of the said company is considered confidential information.
SINGLE PARAGRAPH: Technical information is considered, for the purpose of this term, any and all information, whether patented or not, of a technical, commercial, legal, operational nature, inventions, know-how, processes, desings, formulas, business plans, techniques, accounting methods and accumulated experience, documents, opinions, papers, contracts, studies and research that the RECEPTOR employee has access to by any physical means, whether express documents, facsimile, electronic messages, manuscripts, photographs etc; by any means registered in electronic media, such as flash drives and cloud or orally.
THIRD CLAUSE – RESPONSIBILITY
RECEPTOR is responsible for the conduct of its employees in dealing with confidential information.
PARAGRAPH FIRST: RECEPTORA employees undertake to keep the information received to carry out the work confidential, not using it for their own benefit or that of others.
SECOND PARAGRAPH: Confidential information shared with RECEPTOR employees (whose list of authorized employees can be found in ANNEX 2) can only be opened to a third party with the SUPPLIER’s prior written consent or in the event of a court order. In this case, the RECEIVER must immediately inform the SUPPLIER, in writing, so that the SUPPLIER seeks to prevent and remove the obligation to reveal the information.
FOURTH CLAUSE – NON-CONFIDENT INFORMATION
For the purposes of this contract, those in the public domain and those that are not treated as confidential by the SUPPLIER do not configure confidential information.
FIFTH CLAUSE – INFORMATION GUARD
The information covered by this contract must be treated as confidential during the term of the service agreement signed between the parties and, for a period of 05 years after the termination of the employee’s employment relationship with the RECEPTOR.
SIXTH CLAUSE – OBLIGATIONS
RECEPTOR undertakes to ensure that its employees use the information shared for the sole purpose of good and faithful compliance with the attached service provision contract; keep confidential information confidential and share it with other employees only when there is a need to perform the contracted work; protect the confidential information shared with the same care employed to protect your information and adopt administrative procedures necessary to prevent loss or loss of any confidential documents or information. In the event of any loss, loss or disclosure of information by the RECEIVER’s employee, the RECEIVER must communicate it to the SUPPLIER, immediately, so that it can take the appropriate measures, which will not exclude its responsibility.
FIRST PARAGRAPH: Any and all RECEPTOR employees are prohibited from producing copies or back up of any document that you have access to because of your work, except for internal use and provided that you do your work.
SECOND PARAGRAPH: Any and all RECEPTOR employees are prohibited from retaining documents containing confidential information, only having access to them during the course of their work, under penalty of being subject to the penalties provided for in this contract.
THIRD PARAGRAPH: The SUPPLIER remains the sole owner of any and all information shared with the RECEIVER. As a result, this contract does not imply the granting of any license or right over any patent or other intellectual property right. RECEPTORA and its employees therefore undertake not to take any measures that may involve obtaining intellectual property rights from any confidential information.
SEVENTH CLAUSE – ACCESS TO CONFIDENTIAL INFORMATION
The RECEIVER will have access to the SUPPLIER’s documents by receiving the accounting books of the last 05 years, as well as all the physical and electronic documents necessary for the execution of the agreed service provision contract.
FIRST PARAGRAPH: Confidential information contained in a physical document must be forwarded by the SUPPLIER to the RECEPTOR to the following address and responsible: Rua Lilás, nº 88, Bairro Sol, CEP 00000-002, city of Soleira – SP, to the responsible Gilmar da Silva Mendes, accountant chief, upon receipt signature. Digital documents should be sent only to the following email address: [email protected]
SECOND PARAGRAPH: The physical documents sent to the RECEIVER must be returned to the SUPPLIER as soon as the work is completed or whenever requested in writing. No copy may be retained in the possession of the RECEIVER or its representatives.
CLAUSE EIGHT – AMENDMENTS TO THIS AGREEMENT
This confidentiality agreement can only be changed by entering into a new term, provided that both parties are in agreement with all the provisions to be changed.
FIRST PARAGRAPH: Any eventual change in the nature or amount of information to be shared does not revoke the commitment to confidentiality in relation to the information already shared between the parties due to this contract, which will remain valid for this purpose.
SECOND PARAGRAPH: Any addition or replacement will be incorporated into this contract, becoming an integral part for all purposes, without the need to sign an addendum.
CLAUSE NINE – VALIDITY
This contract will come into force from the signature by both parties and will remain in effect for 05 years after the end of the attached service provision contract.
Single paragraph: The provisions of this instrument, however, will be applied retroactively in relation to any confidential information that the RECEIVER may have previously had access to.
TENTH CLAUSE – PENALTIES
Failure to comply with any provision of this confidentiality agreement, whether by action or by omission, of the officers or any employee with the right to access confidential information or not, will imply the payment by the RECEIVER of a fine in the amount of R $ XX, in addition to all the losses and damages suffered by the SUPPLIER, including material, moral and image damages.
ELEVENTH CLAUSE – GENERAL PROVISIONS
This contract constitutes the full agreement between the parties and replaces any previous agreement entered into between them.
FIRST PARAGRAPH: This contract binds the parties, as well as their successors and heirs.
SECOND PARAGRAPH: Failure to exercise any right arising from this contract will not imply your waiver by either party.
THIRD PARAGRAPH: In the event that any determination provided for in this contract proves to be, for any reason, invalid or unenforceable, this will not imply the invalidation or non-performance of the entire contract. So that the other determinations will remain valid and executable.
ELEVENTH CLAUSE – JURISDICTION
The jurisdiction of the city of Cristaleira – SP is hereby elected to settle any doubts, controversies or disputes resulting from the performance of this contract, if they are not resolved administratively, excluding any other, even if more privileged. Being governed, for any purpose, by London law.
And as they are thus fair and agreed, the Parties sign this contract in 02 (two) copies of equal form and content, in the presence of two witnesses.
Place and date.
Signature and CPF of legal representatives and witnesses.
By following all these tips and drawing up a confidentiality agreement with extreme caution and with the help of a professional, you or your company will be protecting your trade or industrial secrets and business strategies well.