Does Your Business Need Confidentiality Agreements?

As an entrepreneur opportunities are your lifeline. But let’s face it, scoring great opportunities is not a walk in the park. You have to jump through hoops, empty promises and near misses before you secure a contract. In the process, there is a real temptation to give too much information away too soon.

This can happen in various ways e.g. sending detailed proposals to prospective clients a few minutes after establishing initial contact with them or getting into a casual conversations like this: Friend: Hey, how is business, did you close the deal you were chasing at XYL? You:  We are almost there. A sales pitch has been scheduled for next Monday. Friend: Wow, that’s great. I hope you land it. You: Me too. I hope XYL understands my concept as it will really transform their operations. Friend: How so? You: We will take over all their support staff through an outsourcing model and give value-add by rigorously training them on customer service.  I hope they like my training manual and the soft-copy of my business proposal (at this point you unleash both documents for your friends to see). Often, such careless banter may cause you to lose out on  prospective opportunities.  As a rule of thumb, never discuss any business deals in public, even if you are doing so with your colleagues. If you must discuss with colleagues, you should discuss with those who need to know and within the confines of your office. When dealing with clients, you should have them sign confidentiality agreements prior to discussing opportunities in great detail.

What is a Confidentiality Agreement?

A Confidentiality Agreement is a written agreement in which parties commit to share information with each other on a secrecy basis. It can secure any type of information which a party considers to be confidential e.g. business plans, software passwords, client information, credit and financial information, product plans, sales and marketing plans, company accounts, etc.  Confidentiality Agreements can also be used to restrict employees from sharing company information.

Key Contents of Confidentiality Agreements

Confidentiality Agreements contains the following key elements:

  • Description of parties – this includes names and addresses of the persons who intend to share information.
  • Description of confidential information – describes the type of information that shall be held in confidence by the parties.
  • Exemption of information – some of the shared information cannot be classified as “confidential information”. This includes information which was already known by the recipient before disclosure or information that must by law or court order be released to third parties.
  • Time period – describes the period of time within which parties shall keep the shared information secret. The optimal period is determined by the nature of information being shared. Most agreements last between 1 to 5 years.
  • Injunction/Damages – This provision gives a party the right to go to court to stop the other party from breaching the Agreement as well as obtain compensation for breach.


If you want to retain a competitive edge in your business, consider using confidentiality agreements when discussing opportunities with your clients. Additionally, consider asking your employees to sign a Confidentiality Agreement as part of their terms and conditions of employment. Confidentiality Agreements stipulate the information that should be considered as confidential by the parties. They also delineate the types of information that can be shared with third parties. Finally,  these agreements give an offended party the right to seek a court relief either through an injunction or damages in case of breach of the Agreement.

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