Why (and how) enter into a confidentiality agreement

According to data from S&P Global, The economic activity index in Brazil increased in March 2023 for the first time since October last year. The increase in new businesses and the expected growth of the economy demand from companies a high level of sharing information that is often strategic and sensitive in order to carry out their activities - and that's where the confidentiality agreement comes in.

Confidentiality agreements or”Non-Disclosure Agreements” (NDA) occupy an important space in the protection of strategic and confidential information of the parties involved in a given commercial transaction, such as to negotiate the provision of a certain service, buy and sell companies, demonstrate new technology, and even establish the obligation of secrecy by employees when they are hired for a new job or project.

Concluding a confidentiality agreement therefore demonstrates the commitment of the parties to protect the information that will be shared, strengthens mutual trust, and fosters an environment conducive to innovation and knowledge exchange.

Understanding the importance of confidentiality agreements and knowing how to enter them properly becomes an important factor in ensuring sustainable growth and trust in the business environment.

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What is a confidentiality agreement?

A confidentiality agreement, or confidentiality agreement, is nothing more than a contract signed between two or more parties to protect confidential and sensitive information that may be shared between them. Its main objective is to ensure that sensitive information is not disclosed to third parties without proper authorization, preserving the privacy and security of corporate information, thus avoiding the sharing of sensitive data, in addition to possible industrial espionage and data leakage.

The types of confidentiality agreements

Confidentiality agreements can be classified as:

Unilateral

In this case, only one of the parties involved in the agreement shares confidential information (disclosing party) with the other party (receiving party), who undertakes to keep it confidential.

Bilateral

When both parties exchange sensitive information with each other and, as a consequence, both are obliged to protect the confidentiality of the information received, both of them, mutually, acting as disclosing and receiving parties.

Multilaterals

These types of NDA involve three or more parties that share sensitive information with each other. It is generally used in situations where several companies are involved in a joint project or collaboration where confidentiality is essential for the success of the venture.

Sectorial or by purpose

These types of confidentiality agreements are specific to protecting sensitive information related to a particular sector or business purpose. For example, an NDA may be designed to deal exclusively with issues related to intellectual property, technology, or financial information.

The structure of the confidentiality agreement

For the confidentiality agreement to achieve its objectives, it is necessary that they contain some devices for the proper protection of the confidentiality of the shared information, such as:

Definition of the parties

It is essential to determine in the instrument whether the agreement will be unilateral, bilateral or multilateral, making it clear who will pass on the confidential information (disclosing party) and who will receive (receiving party). This establishes the responsibility and obligations of each party regarding the confidentiality of the information.

Confidential Information

It is important to establish in detail what information will be protected by secrecy, avoiding generic understandings that could lead to future conflicts.

Exception from the obligation of secrecy

Just as it is important to establish what confidential information is, it is also important to establish in which cases, the obligation of secrecy ceases to exist, such as in relation to information that was already public knowledge before the conclusion of the agreement or even in relation to that information that was already known to the receiving party before the confidentiality agreement was signed.

Nor would it make sense to maintain an obligation of confidentiality when the receiving party needs to disclose protected information as a result of an order from a public authority. In the latter case, it is common to establish in the agreement the obligation to notify the disclosing party about the court order, so that the latter can act to protect your information.

Deadline

Normally, a deadline is established for the confidentiality obligation to remain in force. This period may be expressly determined or the obligation may be established for an indefinite period. The obligation of secrecy can be maintained even if the relationship between the parties ends. It is important to note, however, that contracts with an indefinite or perpetual term can be terminated with a notice period of 30 (thirty) days.

Penalty

In the event of a breach of the confidentiality obligation, it is necessary to establish a form of redress for the damage suffered by the disclosing party.

When to enter into a confidentiality agreement?

There are several occasions when you should consider signing a confidentiality agreement. Strategic information that requires protection can be exchanged when negotiating a business partnership, in cases of mergers and acquisitions of companies, in employment contracts, supply contracts, or even when intellectual property is shared, to name a few examples.

How to facilitate and expedite the celebration of the NDA

Generally, the flow of drafting, negotiating, approving, and signing an agreement requires a lot of time from several people involved. In the case of companies, where the conclusion of NDA agreements is part of the business routine, implementing a more agile and secure process to ensure smooth hiring has proved to be relevant not only from the point of view of reducing hiring time, but also of reducing costs.

In this sense, the automation of the process of drafting, signing, and storing these documents can reduce the time it takes to conclude these agreements to just a few minutes. Here's how an automated document flow works on Clicksign:

At Clicksign, in addition to being able to manage the documents, you can send them for signature and find them easily and quickly, which helps to follow up the contracts filed on the Platform, making the process much more agile.

Validity of agreements signed with electronic signature

The use of electronic signature, or digital, as it is commonly called, is provided for in the Civil Code and the Code of Civil Procedure and, since the edition of Provisional Measure No. 2,200-2/2001 and, later, of Law 14,063/2020, there is no doubt about the legal validity of electronically signed agreements.

There are three types of electronic signatures, according to Brazilian law:

• electronic signature qualified which is the one carried out using a Digital Certificate issued by an ICP-Brazil certification authority;
• the electronic signature advanced that uses other means of verifying the authorship and integrity of electronic documents, such as biometrics and pix, for example, uniquely authenticating the signer;
• electronic signature unsophisticated which uses less refined forms of identifying the signer, such as an email or the IP address of the device used at the time of signing, for example.

The confidentiality agreement can be signed with any type of electronic signature, since the law does not provide for any hierarchy between them. It is enough for the parties to choose the most convenient and suitable way for them.

As seen, the confidentiality agreement is an essential instrument for protecting valuable information and ensuring security in companies' commercial and business relationships, and can be signed electronically through the Clicksign platform, in an agile, convenient and efficient way.

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