What every business needs: confidentiality agreements

Darcy MacMillan, Solicitor

This is the second article in our “What every business needs” series, focusing on the essential documents and protections that support strong, well-structured commercial operations.

In almost every commercial relationship, there comes a time when sensitive information needs to be shared before the parties are ready – or able – to formalise a full contract. That’s where confidentiality agreements, commonly known as non-disclosure agreements (NDAs), come into play.

When should NDAs be used?

NDAs are useful whenever one or both parties will be disclosing information that is not publicly available and could lose its value – or cause harm – if shared more widely. Typical scenarios include:

• Early-stage negotiations (for supply arrangements, joint ventures, collaborations or potential acquisitions).
• Pitching ideas or proposals to potential partners or investors.
• Sharing technical information such as product designs, formulas or software.
• Giving access to internal data for due diligence or scoping exercises.

If you are sharing something that gives you a competitive edge to a third-party, exposes your business strategy, or includes personal or commercially sensitive data, an NDA is usually the first sensible step.

What should an NDA cover?

A well-drafted NDA should do more than simply say “don’t tell anyone”. Some key points they should include are:

• A clear definition of confidential information with careful consideration to the requirement for “necessary quality of confidence” – so both parties know exactly what is protected.
• Permitted purpose – defining how the information can be used and restricting use to that specific purpose only.
• Obligations on the receiving party – such as keeping the information secure, limiting access to those who “need to know”, and not copying or exploiting the information.
• Exclusions – for information that is already public, already known to the recipient or independently developed.
• Duration – confidentiality obligations can continue beyond the end of discussions or the commercial relationship, provided the information retains its confidential character.
• Remedies for breach – such as the ability to seek injunctive relief or prevent further disclosure.

These elements help ensure that the NDA is workable and clear.

Why NDAs are the first step in protecting commercial relationships

An NDA is often the first formal document exchanged between potential commercial partners. It sets expectations, establishes trust, and signals that sensitive information will be handled responsibly. It also creates a framework for open discussions as parties are more willing to explore opportunities when they know their confidential information is protected.

Used correctly, an NDA doesn’t just safeguard against misuse of information, it helps build the foundation for a transparent, well-structured commercial relationship. Our commercial team has extensive experience drafting NDAs tailored to a wide range of commercial situations, please get in touch if you’d like to discuss whether your business would benefit from one.

Next Up

The next article in our “What Every Business Needs” series will explore website terms of use, privacy policies and cookie notices – what they must include and why they matter to every business operating online.

Contributors: Imogen Unwin, Trainee Solicitor