It is also referred to as a Non-Disclosure Agreement or a Secrecy Agreement. It is a contract or a settlement between two persons (either an actual person or a juridical entity) wherein they agree to keep certain ideas or concepts private.



This type of contract is more widely used in Business and Employment. This agreement is imperative especially if the trade or business of the company involves specific secrets like formulas, recipes or techniques.

In the competitive world of Business, entrepreneurs would not want to reveal or disclose certain things with their competitors. Sharing of secrets with rival companies would be fatal to one's business. One could possibly lose his income, incur losses or even close down if ever certain information leaks out.

As a result, newly hired employees, latest partners or recent investors are usually asked by their employers, by the old partners, by the partnership or by the company to sign on the Confidentiality Agreements in order to prevent them from revealing the trade or business secrets. By signing on the contract, the parties are deemed to have read and concurred on all the terms and stipulations contained therein.

Non-conformity or violation of any or all of the conditions of the agreement by an employee could be a ground for suspension, or termination.

A partner could be kicked out from the firm for failure to abide by the terms of the contract.

In addition, an incorporator or an investor could face administrative and federal charges for disobeying the agreement.

This is the reason why Confidentiality Agreements must be drafted and read carefully. It must contain exact details and strict stipulations, which could hold an offender liable for his actions. It must contain no loophole. It must not be drafted in a vague and ambiguous manner so that parties to the agreement could not find ways to circumvent or totally evade its stipulations.

The most competent and skilled person to draft and read a Confidentiality Agreement is a lawyer. He or She has the proper knowledge and experience to detect if the contract contains any unclear proviso or violation of the law.

In making or reading a Confidentiality Agreement, it is imperative that the parties confer the matter to an attorney. This is a serious matter, which needs careful attention and meticulous preparation.

A Non-Disclosure Agreement contains elements, which are essential and must always be present in all Secrecy Agreements. There are some, which are only optional to the contract. They are:

1.The Definition of Confidential Information ? is the most important part of the contract. It contains the scope of information covered by the agreement.

2.Explanation of Purpose for Disclosure ? the contract must explain to the parties why certain information must be kept private between them.

3.Disclosure ? this is optional because the confidential information is revealed in this part.

4.No Disclosure ? it is the part where the recipient agrees not to disclose the information.

5.No Use ? it is the part where the recipient is prohibited to use the information for any other purpose.

6.Limitation ? it is the part which limits the information being deemed confidential

7.Term ? provides for the period of effectivity of the contract.

8.Other provisions