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Everything You Need to Know About Confidentiality Statements in 2021

What is a Confidentiality Statement?

A confidentiality statement, also known as a nondisclosure agreement (NDA) or a confidentiality agreement, is a legally binding contract that establishes a confidential relationship between two or more parties. This statement outlines the responsibilities of each party to protect confidential information, such as trade secrets, proprietary information, and other private business matters.

Who Uses Confidentiality Statements?

Confidentiality statements are often used in business, medical, legal, and other professional relationships. Companies may require their employees to sign a confidentiality statement, which outlines the expectations for the employee to keep confidential information safe. Businesses often require contractors and suppliers to sign a confidentiality agreement before doing business. Medical clinics and health care providers may also require patients to sign a confidentiality statement, which outlines the steps the clinic and provider will take to protect the patient’s private medical information.

Why Are Confidentiality Statements Important?

Confidentiality statements are important because they protect confidential information from being disclosed to unauthorized parties. By outlining the responsibilities of each party to keep confidential information secure, confidentiality statements help businesses maintain their competitive edge and protect their intellectual property.

What Should a Confidentiality Statement Include?

A confidentiality statement should include the following:

• The parties involved in the agreement, including their names, roles, and contact information.
• The purpose of the statement, including the types of confidential information that must be kept confidential.
• The duration of the statement.
• Obligations of each party, including the steps taken to protect confidential information.
• The penalties for disclosing confidential information and the remedies available in the event of a breach.
• The governing law of the agreement.

Sample Confidentiality Statements

Confidentiality Statement #1:

This Confidentiality Statement (“Statement”) is entered into by and between [Company Name] (“Company”) and [Individual Name] (“Individual”) for the purpose of protecting confidential information disclosed by Company to Individual. The Statement is effective as of [Date].

Confidentiality Statement #2:

This Confidentiality Statement (“Statement”) is entered into by and between [Company Name] (“Company”) and [Individual Name] (“Individual”) for the purpose of protecting confidential information disclosed by Company to Individual. The Statement is effective as of [Date]. Company and Individual agree to the following:

• Company will not disclose any confidential information to any third party without the written consent of Individual.
• Individual agrees to use the confidential information only for the purpose of performing services for Company.
• Individual agrees to not use the confidential information for any personal gain or to benefit any third party.
• Individual agrees to return all confidential information to Company upon the termination of this Statement.
• Company and Individual agree to the governing law of [State].

Confidentiality Statement #3:

This Confidentiality Statement (“Statement”) is entered into by and between [Company Name] (“Company”) and [Individual Name] (“Individual”) for the purpose of protecting confidential information disclosed by Company to Individual. The Statement is effective as of [Date]. Company and Individual agree to the following:

• Company will not disclose any confidential information to any third party without the written consent of Individual.
• Individual agrees to use the confidential information only for the purpose of performing services for Company.
• Individual agrees to not use the confidential information for any personal gain or to benefit any third party.
• Individual agrees to return all confidential information to Company upon the termination of this Statement.
• Company and Individual agree to the governing law of [State].
• Any breach of this Statement shall result in a penalty of [Penalty Amount] to be paid by the breaching party.

Conclusion

Confidentiality statements are important documents that outline the responsibilities of each party to protect confidential information. They help protect businesses from the disclosure of trade secrets, proprietary information, and other private matters. It is important to ensure that all confidentiality statements include the necessary information to protect confidential information.