Confidentiality Agreement
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Download our Confidentiality Agreement template in Word format. This document is located in the Transfer of Business chapter of Edilex's catalogue of Contract Templates.
Introduction
When two individuals or legal persons begin to study a purchase / sale of business project, the first obstacle to be overcome is the issue of protecting the confidential information to be exchanged by both sides during the evaluation period for the purchase project. To ensure that this project starts on the right footing, it is important to structure it in a way which creates the confidence and efficiency required to bring the proposed purchase to a successful end. Although the bulk of the disclosure obligations rests with the potential seller in this type of transaction, it is sometimes desirable to favor a certain reciprocity in the confidentiality obligations so as to give equal protection to both parties.
This document establishes the legal framework for the exchange of information and the bilateral undertakings relating thereto. It differs from documents Y01.300 and Y01.350 of the Business Precedents as it protects both parties.
Description
This Confidentiality Agreement is the legal instrument by which two parties open confidential lines of communication in order to collaborate to perform a proposed acquisition. This is a "mirror" agreement, as the parties to the agreement generally contract, in this preliminary phase, the same obligations toward each other.
Use
We recommend using this document if the transaction involves an exchange of confidential information. This usually occurs when the transfer of ownership of the business involves any payment in shares of the purchasing corporation, thus requiring the seller to review the financial health of the purchaser before accepting such a payment.
In the absence of such an agreement between the parties, there is a risk that unprotected information will be made available in the public domain, which may compromise any subsequent attempt by one or other of them to claim a property right in the information disclosed and the fruits thereof.
If there is only one party who discloses information of a confidential nature, we recommend the use of the Confidentiality Letter instead. (See documents Y01.300 or Y01350 of the Business Precedents).
