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Some basics of confidentiality agreements

Whether you're signing a nondisclosure agreement as part of your latest business partnership, or you're a new employee agreeing to hold your employer's information confidential, it's a good idea to understand what you're putting your name to. Confidentiality agreements have become a standard course of business over the years, but they do include some important fine print.

First, both sides to a confidentiality agreement must understand that most such agreements are limited in nature. For example, if the confidential information becomes public knowledge without any action or disclosure from the person singing the agreement, then that person cannot be held accountable for the disclosure. At that time, the information is usually not considered protected under the agreement any longer, though related information and the individual's relationship to the information might still be protected.

A confidentiality agreement usually states who owns the information. The reason for this is because the person disclosing the information -- such as the employer -- has rights and control over the information. They might be sharing the information with someone else because of a business need, but they are not conveying the ownership or control of that information to the other person.

Finally, a confidentiality agreement typically includes information about how disputes under the agreement will be handled. This might include a requirement for mediation or what consequences might be faced if confidentiality is breached. Consequences could include loss of employment, termination of contracts, and even lawsuits and fines.

Understanding every contract you sign is important. Contracts and agreements in a business setting are usually complex, which means assistance in understanding contract language from a legal professional might be helpful.

Source: Iowa State University, Extension and Outreach, "Overview of Confidentiality Agreements," accessed Feb. 05, 2016

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