Many firms are right to be cautious despite the effects of the recession starting to lift. That’s the view of Sussex solicitors Adams & Remers who have reported an increasing number of businesses asking for advice on protecting their business interests
"In recent months, we have had more clients, including retailers, asking us to prepare Confidentiality Agreements," says Nichola Marven, solicitor with Adams & Remers. "Their reasons include anything from trying to protect valuable information when selling the business to seeking external investment."
According to Adams & Remers, the value of Confidentiality Agreements is that they "install a layer of protection for business information, ideas or products". It clearly puts the other party (the ’receiving party’) on notice that whatever is being disclosed to them is considered valuable, that they wish to protect it and that the receiving party should treat it with due care.
"The main reason for having an agreement," says Nichola Marven, "is for protection and to prevent the receiving party from using the information for their own benefit and to the detriment of the disclosing party."
A good agreement will have a clear, broad definition about what the parties are proposing to discuss. The remainder will set out what the receiving party can, and cannot do, with the information. Restrictions will cover issues such as whether they are allowed to make any copies or disclose anything to their employees and how long they are bound by the terms of the agreement.
If a material term of the agreement is breached, the disclosing party will be able to stop the receiving party from using the information for their own purpose and seek damages for losses incurred. Depending on the breach, there may even be injunctive remedies to stop the receiving party using the information any further.
"Without such an agreement," says Nichola Marven, "it is much harder to prove the intent of the parties and any restrictions agreed verbally by the parties."
She concludes: "Agreements are a protective measure and should always be considered before entering in any discussion where valuable business information is likely to be disclosed. The world of business can be tough and, in difficult situations, it is always better to have a legally-binding agreement to help you fight your corner."
