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Confidentiality agreements: an indispensable tool prior to negotiation

Confidentiality agreements, every lawyer must know how to apply and respect them in order to protect their clients' information.

There is one contract that must not be missed before starting a project any negotiation: a confidentiality agreement. In it, both parties, whoever they may be, agree to protect their own private information and that of the parties involved. The confidentiality agreement, also often called NDA (Non - disclosure agreement), is a very frequently used instrument in law during the conclusion of agreements or negotiations, even within the companies themselves to protect sensitive information from their employees. 

Its importance lies in the fact that it is the only guarantee that legally preserves the confidential information of the parties.When they join forces in a negotiation or project, they share private information about themselves that should not be publicly disclosed. This data is relevant for the parties, especially when they need to know the internal processes to evaluate the terms of the relationship. Such contracts are an essential tool for those legally defending the parties and a very effective way to avoid legal problems in the future.

Generally, NDAs or confidentiality agreements are used in all commercial activity.In cases of mergers of companies or institutions and in all matters related in any way to intellectual property. In addition, they are common in the hiring of personnel, if they are involved in activities in which private information is handled, such as lawyers.

They differ from confidentiality clauses in that they are These are independent contracts, while the clause is part of an initial contract, where aspects related to the protection of information are taken into consideration.

The successful outcome of an agreement of this nature generates a confidential relationship between the parties involved. to protect all types of private commercial information, such as clients, collaborators, investors, financial information, business model and all information of the company that is not public at the time of signing the NDA and to which it has had access for any circumstance. Contracts can be freely negotiated by the parties, but ideally these types of documents should be drafted by experts in the field to ensure that the most favorable measures are taken for both parties. 

Indispensable for a confidentiality agreement

As mentioned above, among the practices of a good lawyer is to make use of confidentiality agreements or NDAs in their professional practice, when they have to assist companies, institutions or natural persons who share commercial interests. 

One of the first steps in successfully carrying out such a contract is to know perfectly the nature, objectives and needs of the company, organization or initiative being defended. Being very clear about these aspects will ensure that the lawyer can do a good job in defining the clauses of the agreement. 

After knowing in depth the raison d'être of the company or institution and the interest for the alliance, these are the considerations to take into account:

  1. Clearly define the characteristics of the information considered confidential.
  2. Define the parties involved.
  3. Obligations of the parties involved regarding the handling and provision of information.
  4. Establish the reasons why information may cease to be confidential in terms of the agreement.
  5. Exceptional circumstances under which confidential information may be shared with third parties.
  6. General clauses on the use of confidential information between the parties, including the duration of the contract.
  7. Method of dispute resolution.
  8. Criminal liability for breach of confidentiality agreement. In cases of contracts with employees, termination may be established for any breach.

The purpose of these agreements is to protect all those aspects and information that are useful and necessary to safeguard the company's economic interests.For this reason, it is essential that the parties know and understand very well the grounds for non-compliance and especially the type of actions that can be exercised in case of violation, whether civil or criminal, these stipulations are those that will allow claiming and obtaining a fair compensation in case any of them discloses or makes improper use of the information protected in the NDA. 

In Alan Aldana & Abogados we have years of experience in the preparation and negotiation of confidentiality agreements for our clients, we also have a multidisciplinary team for the best defense of your rights and interests in case of a possible breach of confidentiality.

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