What is a Confidential Information Agreement?

A confidential information agreement, often simply referred to as a confidentiality agreement, is a contract that requires secrecy. A confidentiality agreement may be unilateral or there may be multiple parties bound by its terms. Such agreements are often made between employers and employees, sellers and buyers, and researchers and sponsors. Although they may be used for a variety of purposes, they are not valid for hiding criminal activities.

Anyone who has signed or who plans to sign a confidential information agreement should understand that such a document is more than a mere casual pact not to disclose information. Signing such a document initiates a contract. Failing to adhere to the terms can result in legal and financial consequences. Anyone who signs a confidential information agreement should read it carefully and she should be clear and knowledgeable about exactly what is to be kept secret and the behaviors that constitute disclosure.

There are several instances when a confidential information agreement may be signed. Such contracts are often required of those who deal with governmental or military affairs. A ship building company, for example, is likely to be required to maintain secrecy about the merchandise it constructs and sells to the military. Likewise, employees at the ship building company may be required to sign a confidentiality agreement about their work.

That confidentiality is a requirement of a client is not the only reason an employer may require the signing of such a contract. It may also be required to help protect trade secrets. The ship building company may utilize technology that allows it to dominate a certain segment of the market. If the type of technology applied was revealed or if that technology was shared, it could be detrimental to the company's business.

There are some instances when a party cannot be held liable for the terms of the confidential information agreement. An employer can use such a contract to bar workers from sharing trade secrets, but an employer cannot use it to force employees to provide cover for illegal activities. There are also certain instances when confidentiality is likely to be a concern but a written contract is not necessary. These include when services are provided by a lawyer or by a medical professional. Such relationships are generally already bound by rules of confidentiality.

There are a variety of these documents available online, which can be downloaded and often modified to accommodate the needs of users. These are often good for general purposes. For certain highly sensitive issues, however, it is wise to seek the assistance of an attorney before presenting other parties with a confidential information agreement.