When it comes to protecting sensitive information, companies often turn to confidentiality agreements (CA) or non-disclosure agreements (NDA). While these terms are often used interchangeably, they are actually different legal documents with different implications. In this blog, we will explore the differences between these agreements and provide examples of when each should be used.
Confidentiality Agreements:
A Confidentiality Agreement (CA) is a legal agreement between two or more parties where they agree to keep certain information confidential. This agreement is generally used when one party is disclosing confidential information to the other party, such as trade secrets or proprietary information.
A CA can be unilateral or bilateral. In a unilateral agreement, only one party discloses confidential information, while in a bilateral agreement, both parties exchange confidential information. A unilateral agreement can be used when only one party is sharing confidential information, such as when an inventor is disclosing a new invention to a potential licensee. A bilateral agreement is more commonly used when both parties are sharing confidential information, such as in the case of two companies collaborating on a project.
Non-Disclosure Agreements:
A Non-Disclosure Agreement (NDA), also known as a Confidentiality Clause, is a legal agreement between two or more parties where they agree to protect certain information from disclosure to third parties. Unlike a CA, an NDA is not limited to confidential information, but can also include personal information, trade secrets, and other sensitive information.
When to Use a Confidentiality Agreement:
A Confidentiality Agreement should be used when confidential information is being disclosed by one party to another, such as in the case of a potential business partnership or a new invention being shared with a potential licensee.
When to Use a Non-Disclosure Agreement:
A Non-Disclosure Agreement should be used when sensitive information needs to be protected, such as in the case of protecting trade secrets, or personal information, or when collaborating on a new product or project.
In conclusion, while both confidentiality agreements and non-disclosure agreements serve to protect sensitive information, they are different legal documents with different implications. It is important to understand the differences between these agreements and use the appropriate one for your specific situation.
If you are unsure which agreement is best for your situation please don’t hesitate to contact us at McKenzie Legal & HR. Our expert team will spend time ascertaining your needs and advising on what will suit your circumstances, ensuring you are covered and protected fully.
