All contracts are promises. People are free to enter into any contract they want as long as there are agreements on both sides, and neither promise violates a public policy or law.
A contract will contain promises to act in a certain way or to refrain from acting in a certain way. Confidentiality agreements include promises to refrain from acting in a certain way – to refrain from disclosing information to others.
Confidentiality Agreements in the Business World
In the normal course of business, most companies hire employees and independent contractors to provide various types of needed services. In doing so, these companies often have to provide employees and independent contractors with various confidential information about the company. Businesses could potentially be destroyed by the disclosure of confidential information to competitors or the public. Therefore, many businesses require employees and other parties which whom they contract to sign confidentiality agreements.
Purpose behind Confidentiality Agreements
The legal system supports the growth of the economy, the creation of new ideas, and the conducting of business. By allowing businesses, employees, and independent contractors to agree to keep certain information confidential, businesses will be much more likely to branch out, employ others, and contribute to the growth of the economy.
The Agreement Itself
In order to protect secret information, a confidentiality agreement will state that the person who is about to learn the secret information promises not to disclose it to others. The person about to learn this information may not disclose it now, or at any time in the future as long as it is still secret information.
Often times a confidentiality agreement will define confidential information, or the secret information, as relevant information that is not generally known or available to the public or known to competitors. The contract may list some of the following as confidential information: financial condition, invoices, contracts, forms, research, price lists, vendor information, marketing materials, advertising materials and developments, sales materials and reports, copyrighted materials, trade secrets, designs, manufacturing processes, client lists, client preferences, client needs, client identities, potential client identities, and any other data.
Breaking the Agreement
Noncompliance with the terms of a confidentiality agreement is a breach of contract. Breaches of confidentiality agreements are handled the same way as any other breach of contract. The non-breaching party may file a lawsuit and seek damages for the harm caused by the breach. A court may award damages in the form of an amount of money, or the court may elect another remedy. If the confidentiality agreement itself states what will happen in the event of a breach, the court will impose the remedy in the agreement.