A Confidentiality Agreement, which is also known as non-disclosure agreement or NDA, is simply a contract between two or more parties where the subject of the agreement is a promise that information conveyed will be maintained in secrecy. These agreements can be mutual agreements, where both parties are obligated to maintain secrecy, or they can be unilateral agreements, where only the receiving party becomes obligated to maintain secrecy.
Mutual confidentiality agreements are useful when both parties will be conveying confidential information, such as for inventor groups. Unilateral confidentiality agreements, which are probably most common in the inventing arena, are used when only one party is turning over confidential information, perhaps to a potential investor or prospective licensee.
You can use a nondisclosure agreement to protect any type of information that is not generally known. The creation of a confidential agreement is really the creation of a confidential relationship. Generally speaking, such confidential relationships can usually be created both in writing and orally. It should be noted, however, that while some court cases in some jurisdictions do allow oral creation of such a relationship, and some court cases in some jurisdictions do allow actions to be used as evidence of the creation of such a relationship, YOU SHOULD NEVER RELY ON OR ANTICIPATE THAT A COURT WILL ENFORCE AN ORAL AGREEMENT OR AN AGREEMENT BASED ONLY UPON ACTION.
The reason you should never rely upon an oral confidentiality agreement is simply because it is exceedingly difficult, if not impossible, to prove the existence of an oral agreement and/or actions that suggest the creation of such an agreement. This is because of the “he said she said” problem. Essentially, a case that relies upon an oral agreement will be decided based on who is believed. Don’t put yourself in this situation if you can at all avoid it. It is my opinion that you should always get the agreement in writing (whenever possible), even if you need to water it down a little to get a signature.
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