Will NDAs protect my confidential information?

August 14, 2020

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You will want to reach for NDAs (also known as non-disclosure agreements or confidentiality agreements) before disclosing your confidential business information to anyone as part of a business conversation. 

What do NDAs do?

NDAs aim to ensure:

  • confidential information which is disclosed to a particular person remains confidential to that person
  • the disclosed information is only used for a specific purpose by that person, such as to assess business and financial affairs of your company as part of the due diligence purposes for a business sale, and not to further other interests of that person.

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What are the limits of NDAs?

NDAs, however, do have limitations. You should note that a confidentiality agreement cannot provide absolute protection for your confidential information. If the confidential information is used or disclosed in breach of the agreement, it may be too late or expensive, for you to seek a remedy. You should know that:

  • An injunction can be used to stop someone disclosing the confidential information or using it for their own purpose. Obtaining an injunction will, however, be an expensive and involved process. In any event, if the NDA has been breached and confidential information has been disclosed, of course, the information cannot be made secret again.
  • Claims for damages may not be adequate for you, particularly if the information had potential future value had it been kept confidential
  • Proving a breach of confidentiality as a practical matter is often difficult.
  • Even in the case the NDA has not been breached, the person to whom the confidential information has been released to, will be influenced by the confidential information that has been provided.

What can I do to maintain confidentiality?

As NDAs have limitations, you should also be thinking about taking practical measures to protect your confidential information. You should, of course, only disclose what is absolutely necessary and consider:

  • recording and limiting the number of individuals receiving the confidential information
  • minimising 'opportunistic' disclosure by restricting copying e.g. providing only physical copies for review and preventing copying, software prevention on printing and downloading.

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