In the wake of the recent 'Wikileaks' scandal, the damaging effects of unauthorised disclosure of confidential information is all too apparent. Furthermore, the current technological capacity for exchanging and storing information means that once confidential information has been released, it is impossible to make it secret again. Despite this, the commercial landscape dictates that valuable information is required to be exchanged on a regular basis and, as such, it is imperative that businesses ensure they have an effective system in place to safeguard the value of their information. The most routine method used in the United Kingdom is a confidentiality agreement, otherwise known as a nondisclosure agreement (NDA
A NDA is a valuable mechanism used when parties are required to exchange confidential information for a number of purposes; whether that is during an acquisition process or tender, whilst collaborating on a joint research venture or for the purposes of a services or distribution agreement. While it is virtually impossible to eliminate the risk of an unauthorised disclosure entirely, a NDA can, at least, act to discourage disclosure and will provide legal protection in the event of an unauthorised disclosure. Without this contractual arrangement in place, the disclosing party relies on a number of common law rights which are unlikely to provide a reliable remedy should a breach of confidence occur. An effective NDA ought to cover all eventualities relevant to the specific transaction at hand. However some key points to consider in any NDA are:
Finally, like any contractual arrangement, the provisions of an NDA must be both proportionate and reasonable.
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