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Confidentiality Agreement Questions

Confidential agreement is a legal treaty or agreement between two or more parties who are privy to certain sensitive information, which should not be made available to others outside of this agreement. All the parties involved in the process would have to sign the agreement ascertaining that they would not disclose any of the exclusive information to any other parties. This is also known as a non-disclosure agreement. Many times when signing a confidentiality agreement, people are not sure who this covers and what legalities they could be facing. To know more about issues related to confidentiality agreement, read below the answers provided by Experts.

How does a confidentiality agreement work?

In the U.S, a confidentiality agreement can be used in many ways. A person, who wants to sell his/her assets and /or business, can sign an agreement with the buyer allowing the buyer to examine the confidential papers including bank records and financial books to confirm the value of the asset or business at hand.

An inventor also can sign a deal with other parties to evaluate/license his/her invention. The agreement makes sure that the vital/core information related to the particular invention in question remains secret between the inventor as well as the person evaluating only.

The agreement between an employer and employee is also a type of confidentiality agreement. In this, the employee declares that he/she would not divulge any confidential information related to the job that he/she does on behalf of the employer. In this case, some companies/employers even can ask the employee to sign a non-compete clause which means the employee cannot indulge in any business similarly to the employer even after couple of years of resignation.

In some cases, a person can enter in to such confidentiality agreement, where he/she wants to be protected for providing confidential information.

On what grounds can a confidentiality agreement be terminated or what needs to be done to declare a confidentiality agreement invalid?

In order to terminate a confidentiality agreement, both the parties may use the rescission process by signing a formal rescission document. Once the process is through, it would release both the parties of their obligations related to the agreement. This apart, if one of the parties can prove that he/she was made to sign the agreement under duress, or he/she signed the agreement after being intimidated by the other party, the agreement becomes invalid. But this would need to be proved in a court of law.

Is a non-compete/confidentiality agreement that was signed with one company enforceable once the company is acquired by another company?

In most of the cases the agreement remains enforceable. It all depends on the clauses mentioned in the agreement. A proper review of the agreement papers can clarify the same.

Does a confidentiality agreement enable the company to inspect the personal property of its employees?

Yes, in most cases this is legal. Most of the companies are including such clauses in the confidentiality agreement to safeguard their interest. They reserve the right to inspect computers or other electronic storage devices where sensitive information pertaining to company matters can be stored, whether the electronic repository is owned by the company or the employee.

Does a confidentiality agreement on a business letterhead serve the purpose?

No, most of the time this is not enforceable in the court of law as a confidentiality agreement on a business letterhead is not legally binding.

Can two parties get in to a verbal confidentiality agreement without signing proper documents? Is a verbal agreement legally binding?

Yes, two parties can enter a verbal confidentiality agreement if they want. Such verbal contracts are legally binding, but they are virtually impossible to enforce with the absence of written documents.

Confidentiality Agreements are forms of legal tools used in various organizations. It is always important to go through the entire document before signing to avoid any future trouble. All the clauses in the agreement need to state the purpose of the contract properly and clearly. The process involves the usage legal terms/jargons to make the agreement legally binding and enforceable in the court of law that a layman may not understand. To have a better clarity on issues related to confidentiality agreement, it is always good to consult an Expert who can answer your queries.
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Recent Confidentiality Agreement Questions

  • Signed a confidential general release and separation agreement

    Signed a confidential general release and separation agreement after 27 years of service tocompany.Question Paragraph 8 The Non-Competition, Non-solicitation and confidentiality agreement as well as all other agreements executed by employeein connection with his employment with the company are specifically incorporated by reference and not extinguished by this release, but continue in full force and effect However, to the extent that this release conflicts with any other agreement executed by embployy, this release constitutes the entire understanding and agreement between employee and the companywith respect to the subject matter herof, including any duties owed by the company to employee. This release supersedes and terminates all prior oral or written promises, representations, understanings and agreements.. Does this mean that my non com pete is null and void or do I have the two year non compete in effect?
  • I own a small software company and I sold a "piece of software"

    I own a small software company and I sold a "piece of software" which was custom code for which the business paid for.. They are now coming back months later and saying this isn't going to work for them and they would like a refund. The software included the "source code" / intellectual property and they were supposed to customize the code base my company sold. Could you please provide me with some good case law references for the State of PA or that I could quote regarding "buyer’s remorse" law as this is what this case boils down to.

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  • We recently had a trial regarding a property damage claim.

    We recently had a trial regarding a property damage claim. The case settled following a Pre-Trial Conference. The parties agreed on an amount and the defendant agreed to pay that amount within 7 days. On the 5th day the defendant submitted a draft of a "Release" which included a very extensive confidentiality agreement. The plaintiffs refused to sign, as this was not part of the agreement. Can the defendants hold the plaintiffs hostage and not pay because they refuse to sign the confidentiality agreement?
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