Confidentiality Agreements: What Small Business Owners Should Know

Sound contracts are a vital part of running any business. You’ve worked hard to develop your business into what it is today, so don’t let a few off-the-cuff remarks by a contractor or partner expose confidential information that could harm your business. That’s why it’s essential to have an experienced business lawyer in Orlando draft contracts for your small business. Confidentiality is one key element in many employment contracts. Learn how to incorporate confidentiality clauses and agreements into your business contracts below.

What is a Confidentiality Agreement?

Confidentiality agreements protect the exchange of sensitive information between parties. The primary element of any confidentiality agreement is the confidential information itself. To ensure that the agreement provides adequate protection against unwanted exposure, you must clearly define the types of information you want to keep confidential. You must also state the entities from which you want to keep the information confidential and for how long.

What is a NDA?

Nondisclosure agreements (also called NDAs) are a type of confidentiality agreement that binds two parties from releasing sensitive information. NDAs prevent people from releasing confidential material or trade secrets while employed or doing business with a company. NDAs are often used when potential employees or partners explore whether they want to work with a company. Once the employment offer is made, a confidentiality clause may be included in their employment contract.

When Should You Have a Confidentiality Agreement?

Confidentiality agreements should be used when you share sensitive information about your company, strategies, or practices with your employees, contractors, partners, or potential employees you don’t want the general public to know. This could include information about mergers, partnerships, business transactions, marketing statistics, and more.

What You Should Include in a Confidentiality Agreement

The confidentiality agreement should include anything you’re concerned an employee or potential partner may share with a competitor or neighboring business. A business lawyer in Orlando can help you determine what you should include in your confidentiality agreements. The types of information commonly in confidentiality agreements include:

  • Trade secrets
  • Product development and research
  • Marketing strategies
  • Computer programs
  • Client or customer demographics
  • Intellectual property 
  • Customer contact information
  • Financial information about customers and the company
  • Recipes
  • Formulas
  • Patents
  • Proprietary software

Elements of Confidentiality Agreements

Here’s what should be included in confidentiality agreements:


All agreements must define confidential information and how it’ll be handled in your company. This part should clearly explain what makes something confidential so everyone on your staff can be on the same page.


Next, you’ll want to plainly state how the confidential material should (or shouldn’t) be used. You can state preferred methods of communication and people you can share the information with. Defining these terms will set the foundation for determining whether there’s been a breach in the confidentiality agreement later on. If the terms aren’t defined, a business lawyer in Orlando may have difficulty deciding whether the agreement has been broken.


You’ll also want to define exceptions to the confidentiality agreement. This includes publicly available information or communications disclosed by the company at a later date.

Terms and Timeframes

A solid confidentiality agreement should specify the terms that make the contract binding and the time the agreement should be in place. For instance, some companies may have new employees sign a confidentiality agreement that becomes void after a specific product launches. The confidentiality agreement may also be set up to stay in place as long as the person is employed by your company or for a specific time after employment ends.

Types of Confidentiality Agreements

There are generally two types of confidentiality agreements. Unilateral agreements are one-sided agreements that only one person is bound to. This type of agreement is commonly used in employee contracts, as the employee is typically subject to the contract terms. Bilateral or mutual confidentiality agreements bind both parties from disclosing information. Mutual confidentiality agreements are common when forming new partnerships or buying or selling a business.

Boutty Law Firm: Orlando Business Lawyers

Business law can be complex, so having an Orlando business lawyer on your side is vital to help you navigate the process. Our team at The Boutty Law Firm can help you draft the contracts and documents you need for your business, including confidentiality agreements. Call our office or contact us online today to get started.

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