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Disclosure Agreement

Non-disclosure agreements should bind all parties who receive access to confidential information. A disclosure agreement, usually referred to as a non-disclosure or confidentiality agreement, is an agreement that prevents one party from disclosing or improperly using confidential information provided by another. They are usually entered into in a business context -- a company may require an independent contractor, an employee or another company to enter into a non-disclosure agreement.

1. Scope of Protection

o Confidential information can only be protected to the extent that particular information is defined in the agreement as "confidential." Consequently, the definition of "confidential information" must be drafted carefully. The disclosing party will probably prefer a broad definition, while the receiving party will probably prefer a narrow definition. Avoid overly ambiguous wording such as "any information of a proprietary nature," because this can leave dangerous loopholes. Be specific enough to plug potential loopholes but general enough to relieve you of the need to specifically list every piece of information you want to protect. Exclude information already in the public domain, such as patented designs.


Permitted Disclosure

o The terms of disclosure between the parties should be specific. The disclosing party, for example, might be required to stamp every confidential document "confidential." The receiving party may be required to either return the information at the conclusion of the agreement or erase it from computer hard drives. If the recipient is a company, the agreement might require that any company employee receiving access to confidential information sign an individual confidentiality agreement.

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