WHEN TO USE CONFIDENTIALITY AGREEMENTS

The Confidentiality Agreement is also known as a non-disclosure agreement (NDA), confidential disclosure agreement (CDA), or secrecy agreement.
The confidentiality agreement is typically a written document that binds all parties from discussing ideas, information, plans, secrets or discussions about confidential business transactions. The agreement says that if you violate the terms of the agreement and reveal a company's business secrets without its consent, then the company's lawyers will be knocking on your door, and your lawyers will be kept busy trying to keep you out of trouble.
The confidentiality agreement says:
`I have some trust in you (otherwise I would not be doing business with you), but I need a tighter level of assurance that you are not going to reveal what I am about to tell you, so sign here.'
The agreement also says that all parties involved in the business transaction will not use the information to their benefit without written authorization of the company. Because these agreements tend to be written by attorneys, they are customized to protect the interests of the client, and often specify in excruciating detail what information can and cannot be disclosed. They also differ based upon the type of transaction being protected. The points outlined to protect buyers and sellers in commercial real estate transactions differ from the requirements needed to maintain confidence in confidential company relocations.
Confidentiality agreements may also establish the period during which the employee may be privy to confidential information, and the period during which confidentiality of the information is to be maintained.
It is written to protect the primary concern of the client – confidentiality in transacting business.
But even confidentiality agreements have their limits. If information is later found to be public or becomes public, the obligation of confidence will not be enforceable.
Brokers and sellers use agreements to clearly define expectations and roles in a real estate transaction. These insure that brokers have exclusive rights in seeking land or space for a facility. Economic development agencies tend to sign confidentiality agreements with consultants representing companies, or with company representatives, to ensure that the company's plans to expand or relocate into the region are not made public until the company is ready to do so.
Premature disclosures could lead to stock instability and negatively impact company morale.
Accessibility to state records varies among the states. State agencies seeking to conduct confidential business transactions with companies can sometimes find themselves the target of an investigation to uncover information about a project that had been deemed confidential. In recognition of these laws, confidentiality agreements recognize the dilemma faced by economic development agencies. In the agreement that I was asked to sign, the company simply requested that they be notified immediately in writing if a third party wanted the information so that the company could maintain control over the release of confidential information.
Confidentiality agreements are not a one size fits all remedy to ensure confidential business transactions." These CA's (Confidentiality Agreements) are commonly used when undertaking investigation into a companies covenant. Typically private companies will insist on parties entering into a CA before passing over trading accounts for review.
In other circumstances CA's will be used to protect the specific terms of a leasing deal. Landlords will often want the rent, incentives et al to be kept secret so that they can't prejudice future rent reviews etc. For more information contact: www.houstonrealtyadvisors.net