Time and time again we come across companies who have entered into talks with another business and shared information only for negotiations to break down or The business use the information to their own advantage and the lack of a confidentiality agreement has had a catastrophic effect on the company divulging information without the right protection and remedy in law.

A confidentiality agreement is a legal agreement between you and another party in which you agree to divulge information (trade secrets) to them and they agree not to disclose that information to anyone else.

Generally, information qualifies as a trade secret or confidential when, it is not known in the public domain or, is only valuable as long as it remains secret or confidential.

Having an agreement in place allows you to approach and disclose information to potential partners, suppliers, customers and consultants knowing that they are legally required not to pass on that information. Most documents of this type follow a standard format but must be tailored to fit your requirements if they are to be of any real benefit.

You can use confidentiality agreements to protect you under many circumstances. Here are just a few to give you an idea:

• Intellectual property, trade secrets, eg a mathematical or chemical formula, programme or process, technical drawings and designs, algorithms
• Business plans
• Customer and prospect lists
• Commercial or trading information
• Formalise a relationship, eg between an employer and employee
• Employees are under a duty not to divulge trade secrets however, former and current employees are responsible for many breaches in confidentiality. Therefore it is safest to have a document which states exactly what is confidential and provides for when an employee leaves.

This document will enable you to undertake all sorts of exciting business activities with confidence including:

• Collaborating with others in the development of a product or service
• Working with other companies to sell and buy from each other
• Exploring joint ventures to pool resources and skills to develop a product or service which neither partner would be able to do alone
• Employing new staff and saying goodbye to old ones whilst ensuring there is a way to prevent them from divulging confidential information
• Putting an embargo on journalists in order that you can give information to the press and control when they are made public

A well structured and written document will make for a smooth relationship with your partner and deter anyone from breaching. If your partner breaches the contract, you can take them to court for damages. If you suspect that your business partner may be about to breach your confidentiality agreement, you can get an injunction to prevent this from happening.

The biggest problem in drawing up a confidentiality agreement is determining exactly what is and what isn’t covered by the agreement. Naturally you will want to cover the broadest spectrum of information whilst your partner will try to make the terms as narrow as possible.

Should you have to go to court then it is important that the definitions and exceptions in your document are appropriate for the type of trade secrets you are sharing. If your confidentiality agreement is flawed you may not be protected should it be tested in a court of law.

Whether you sell to other busineses or direct to the public your terms and conditions are there to protect your rights, limit your liabilities and provide you with some security when you sell your goods or provide a service.

In your standard terms and conditions of sale you are contracting with a buyer in the course of a business to business (B2B) or business to consumer (B2C) transaction, for the supply of goods and /or services on your terms.

Sadly, many companies enter into informal, oral arrangements, and disputes arise that could have been avoided if there had been clearly written terms from the start.

Key clauses include:

• Price of goods and/or services
• Arrangements for delivery
• Payment terms – if you don’t agree a credit period with your customers the law sets a default period of 30 days
• The right to charge interest on late-payments and claim compensation for debt-recovery costs
• Quality of goods and/or services
• Returns
• Liability cap

In order for your terms to be binding you need to make your customer aware of, and agree to, your terms of trade and should get them to sign up to your terms before providing them with the goods or services.

In order to be effective the contents of your terms and conditions need to reflect who your sell your goods or services to and on what basis. Supplying to other businesses or to consumers direct require different aspects to be covered in your terms and conditions. Below are the most common senarios:

Business to Business (B2B) Goods & Services

Sale of Goods (Quotation)
Sale of Goods (Purchase Order)
Supply of Services (Proposal)
Supply of Services (Purchase Order)

Business to Consumer (B2C) Goods & Services

Sale of Goods (Quotation)
Sale of Goods (Purchase Order)
Supply of Services (Proposal)
Supply of Services (Purchase Order)

Most companies are able to use one of the terms and conditions above in their normal course of business. Others may have different terms for different transactions or may combine documents for simplicity of implementation.

If you make transactions with your customers electronically you must remember to include your terms and conditions. For those selling goods and services over the internet you should have terms and conditions specifically written for your web site.