The answer to that question is “it depends”. Although I hate getting that answer when I ask a question‚ in this case‚ it really depends on three things (i) the information being disclosed; (ii) how you treat the information being disclosed; and (iii) the contents of the confidentiality agreement. As to numbers “(i)” and “(ii)” if the information could not be obtained through any other means and the discloser of the information treats the information as confidential‚ a court will generally view that material as proprietary to the discloser and will consider it worthy of protection. However‚ without an enforceable confidentiality agreement in place‚ a court will generally (under most circumstances related to a sale of a business) not consider the discloser’s argument that the information must remain confidential.
The fact that you are aware that you should have a confidentiality/non-disclosure agreement signed is a great first step. However‚ in order to make sure that the agreement is enforceable to the fullest extent possible‚ you must make sure that the confidentiality agreement and/or the non-disclosure agreement state the following:
Although confidentiality and non-disclosure agreements have a bad reputation when it comes to the enforceability of them‚ there are steps you can take to increase the odds of enforceability. Many confidentiality and non-disclosure agreements are provided by business brokers at the outset of the transaction. This is the point where you should call an attorney and have him or her review the contents of the non-disclosure agreement. Although the broker forms are sometimes okay to use‚ they may need to be modified to ensure that they would be enforceable in the event you need to stop someone from utilizing the information. There are also additional steps you can take to limit the possibility of disclosure which are discussed in Keeping Your Business Information Secret When Selling Your Business. For more information about the process of selling your business‚ you can order a free copy ENDWISE the guide to selling your business with peace of mind by clicking the link below.
Category: Business Transactions
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