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What is a confidentiality agreement and why is it useful?

There are many things that you might want to keep hush- hush in your business -- not because they are illegal or underhanded, but because they could actually harm your business and help your competitors. This is the reason why some companies opt to have employees sign confidentiality agreements.

When you create a confidentiality agreement for workers to sign, you need to make sure that you have all your ducks in a row. The agreement needs to be as detailed as possible. Before you have any employee sign one of these agreements, you must ensure that it covers everything that you need to be held in confidence and that clear terms are outlined.

What types of things should be covered?

You should make sure that you list specific aspects of business that need to be kept confidential. For example, you might include client lists, sales practices and price markup methods as things to be covered in this agreement. Certain patent information and similar points might also be covered.

What else should be included?

There should be specific information about what can be done if the agreement is broken. There should also be a time limit for the agreement. It is important to include a clause regarding the confidentiality of the information after the person stops working for your company.

When one of these agreements is breached, you might have to take legal action in order to get the remedy due to you. Proving that a breach occurred might be difficult, but it is likely going to be possible. Make sure that you understand what you need to prove your case.

Source: Ag Decision Maker, Iowa State University Extension and Outreach, Department of Economics, "Overview of Confidentiality Agreements," accessed Aug. 13, 2017

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