By David Bacon
Borneo Martell Turner Coulston
IN running your business, you may need to discuss with others, commercially sensitive information. The possible scenarios are extensive. You might need to disclose it to potential investors, to manufacturers, in the course of negotiating business sales or acquisitions and, of course, to employees and consultants.
The nature of the information that might be legally confidential is equally extensive. Business plans, customer lists, financial or statistical information, business methods, processes, computer programs, plans, sketches and drawings will often be considered confidential.
The general law will protect your information so long as it is confidential in nature and the circumstances of disclosure were confidential as well. So, even if you have no agreement as to what is to remain confidential, or you give away more than you intended, you might still be lucky enough to be able to stop unfair use of that information. Ultimately however, this would rely on a judge agreeing with you.
Undoubtedly, it is better to protect the information by signing the other person up to a non-disclosure agreement (NDAs to use the jargon). These have been around for some time. However, as the importance of commercial information has grown, NDAs have become more sophisticated.
Various devices can be tried in the agreement. Firstly, you need to spell out what information is to be confidential. Secondly, you might try to limit the number of people who may have access to the information. Thirdly, it might help to agree where and in what format the information can be held. Fourthly, you might try to extract specific promises as to how the information may be used. All of these are perfectly legitimate ways to protect your information from unfair exploitation by others you decide to do business with.
As far as staff and consultants are concerned, it is perfectly legitimate to include confidentiality provisions in their agreements. While they work for you, you should have adequate protection. Restricting what they might do with the information after the employment or consultancy has ended, can be problematic. It is usually best to tailor any post-termination restrictions to the particular individual and the business. For example, gone are the days when you should automatically include a ‘gagging’ clause when settling a dispute with a disgruntled employee (and quite rightly so, if their grievance was serious and justified).
Don’t overlook this part of your business. It needs to be thought about carefully.
David Bacon is the senior partner at Borneo Martell Turner Coulston and specialises in business law. Contact Borneo Martell Turner Coulston on 01604 622101 or visit www.bmtclaw.co.uk
