Area of Law: Business Law
Answer # 0303
Confidentiality and Non-disclosure AgreementRegion: Ontario Answer # 0303
What is a Confidentiality and Non-disclosure Agreement?
A Confidentiality and Non-disclosure Agreement is often used between an employer and employee to protect proprietary business information of the employer. A Confidentiality and Non-disclosure Agreement may also contain clauses concerning the proprietary rights of the employer and employee in regards to new inventions, improvements to existing products, etc. Sometimes it is part of a written employment agreement, but it can also be a separate contract. These agreements are also useful if disputes arise.
This type of agreement outlines the information that is confidential and proprietary to the employer. It helps to ensure that property and information belonging to the employer cannot be used or disclosed by the employee outside of the employment relationship. It is a way to clarify what the confidential information is, and to restrict how an employee can use the information.
Creating a valid Confidentiality and Non-disclosure Agreement
Like all contracts, a Confidentiality and Non-disclosure Agreement requires that each party provide consideration to be binding. Consideration is something of value, such as money, or, in the context of employment, the employer’s promise of a job and the employee’s promise to provide a service. An employer might require a prospective employee to obtain independent advice to establish that the agreement was freely made. At the very least, the prospective employee should have sufficient time to read and understand the contract before being required to sign it.
Essential features of a Confidentiality and Non-disclosure Agreement
The Agreement must contain a number of features, such as:
- the names of the parties
- the date when the contract begins
- a description and scope of the confidential information
- restrictive covenants as to the use of the confidential information
- duration of the restriction, sometimes it continues even after the employment has been terminated
- if there are any geographic boundaries which the restrictions cover
In addition to these basic features, many such agreements have more technical provisions that address the legal parameters of the contract. For instance, a clause might state that the Confidentiality and Non-disclosure Agreement forms part of the employment agreement between the employer and employee. Some other technical provisions sever an invalid clause from an otherwise valid contract and establish the jurisdiction for legal disputes about the contract.
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