Confidentiality agreement

A type of contract used to protect sensitive technical or commercial information from disclosure to others. Such agreement is often used when a company or individual has a secret process or a new product that it wants another company to evaluate as a precursor to a comprehensive manufacturing license agreement or technology transfer agreement; or, perhaps one Party wants to evaluate another’s existing commercial product for a new and different application. Confidentiality agreements perform mainly three functions: (a) protect sensitive technical or commercial information from disclosure to others; (b) prevent the forfeiture of valuable patent rights; (c) define exactly what information can and cannot be disclosed. This last function is usually accomplished by specifically classifying the nondisclosure information as confidential or proprietary. The definition of this term is, of course, subject to negotiation. As one would imagine, the company or individual disclosing the confidential information (the discloser) would like the definition to be as all-inclusive as possible; on the other hand, the company receiving the confidential information (the recipient) would like to see as narrowly focused a definition as possible. There are many models of confidentiality agreements: each company tends to treat its own confidentiality agreement with great pride and possessiveness, which causes delays, discussions, negotiations and higher transaction costs. Also called non- disclosure agreement. Model of Confidentiality Agreement.

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