Understanding Client Confidentiality Agreements

Client confidentiality agreements, also called non-disclosure agreements, are often requested by clients before consultants are given authorization to commence work. In general, a client confidentiality agreement provides assurance that the hired individual won’t release confidential information about the client that may be exposed during the interview, consulting process, or contract period. It is a legal agreement often requested when a client has sensitive or private information that they don’t want as public knowledge.

Purpose of Client Confidentiality Agreements

Client confidentiality agreements have a number of purposes, including the ability for clients to have their private information kept private. The economy also relies on confidentiality agreements as these legal documents offer clients the freedom to develop new ideas, grow their companies or ideas, and further contribute to the economy’s growth.

Why Do Businesses Request Client Confidentiality Agreements

With the primary purpose of client confidentiality agreements to protect the client’s confidential information, many businesses request this legal document in order to protect their company. During consultant work, for example, the consulting professional will often view various data or documents, and hear verbal discussions about a company’s status, finances, and future goals. By requesting a client confidentiality agreement, companies have peace of mind that the consultant will keep these things out of the public’s eyes and ears.

Typical Components of a Client Confidentiality Agreement

All confidential agreements state that the person signing the legal document will not disclose any information they hear or detail observations they see when visiting or working with the business. Many client confidentiality agreements also list the types of information that may be revealed and should remain a secret, such as the business finances, trade secrets, sales reports, advertising materials or marketing materials, price lists, invoices, and contracts. The agreement is then dated and signed and may also include information the length of the agreement.

Implications of Breaking a Client Confidentiality Agreement

Breaking a client confidentiality agreement, whereby an individual discloses information to the public that was against the agreement, is known as a breach of contract. When this occurs, a business can sue the individual over the cost of damages from the release of information that may be settled in or out of court. Some confidentiality agreements detail exactly what will happen if a breach of contract is made, while others leave this open for interpretation.

Should You Sign a Client Confidentiality Agreement

Client confidentiality agreements offer the business protection from private information being disclosed to the public without their consent, but the individual who is to sign the agreement should also take extra precautions. Before signing anything, read it over very carefully and have a lawyer view the contract to be sure it is in the best interest of all parties involved.

When businesses work with consultants or independent contractors who may observe internal workings of their company, a client confidentiality agreement can help to protect trade secrets, proprietary methods, and other private business information. It is often the best way to ensure their sensitive business information is kept from public view.