How to Draft an Reasonable Client Confidentiality Agreement

Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

At Genie AI, we understand the importance of having a client confidentiality agreement in place for businesses, and other professionals to protect confidential information shared between them and their clients. A client confidentiality agreement, also known as an NDA (Non-Disclosure Agreement), is a legally binding contract which outlines how both parties handle confidential information. By having an agreement in place, it ensures that both parties take accountability for any sensitive information they share, while creating an environment of trust and security.

When drafting a client confidentiality agreement, it’s important to ensure everyone involved is aware of their responsibilities which are set out within the document. It must also be written in clear terms and should be legally enforceable - to ensure the rights of all involved are protected. Having this agreement in place serves as an effective deterrent against potential breaches of the contract; by being able to address this quickly you can avoid further damage to business or professional relationships.

At Genie AI we offer guidance on how best to draft a reasonable client confidentiality agreement that meets your requirements; from understanding consensus on this topic through our community template library to providing free templates tailored specifically for your needs – we’re here to help! Read on below for our step-by-step guide and find out more about accessing our template library today - no account required!

Definitions

Disclosing party: A person or business who is sharing confidential information with another.
Receiving party: A person or business who is receiving confidential information from another.
Trade secrets: Information that is not generally known and has economic value because it is kept secret.
Proprietary information: Information that is owned by a company or individual that is kept confidential and is used to give them an economic benefit.
Sensitive data: Information that requires protection due to the potential harm that could be caused if it is accessed by unauthorized persons.
Exceptions: An instance in which a rule or agreement does not apply.
Exemptions: An exception or exclusion that relieves a person or business from a legal obligation or duty.
Renewal period: An extension of time in which a contract or agreement remains in effect.
Compensatory damages: Money awarded to a person or business to make them whole as a result of a breach of contract or other harm.
Punitive damages: Money awarded to a person or business as a punishment for a wrong committed by another person or business.
Injunctive relief: An order from a court that requires a person or business to either stop an action or start an action.
Specific performance: An order from a court that requires a person or business to fulfill the terms of a contract.
Equitable remedies: An order from a court that requires a person or business to take actions to remedy a situation.
Encryption: A process that makes information unreadable to all but authorized persons.

Contents

1. Identifying the parties involved in the agreement.
2. Defining what confidential information is included in the agreement
3. Establishing the scope of confidential information subject to the agreement
4. Specifying any exceptions or exemptions to the scope of confidential information
5. Establishing a timeline of when the agreement begins and ends
6. Establishing the consequences of a breach of the agreement
7. Specifying any financial or other damages that may be awarded for a breach of the agreement
8. Establishing the legal remedies available to the parties
9. Setting out what type of documents or materials must be kept confidential
10. Establishing protocols for the handling of confidential information
11. Specifying any required security measures for the storage or transmission of confidential information
12. Outlining the procedures for the proper disposal of confidential information
13. Specifying the circumstances in which confidential information may be disclosed
14. Establishing requirements for the parties to receive prior written consent before disclosing confidential information
15. Establishing the obligations of the parties to return or destroy confidential information upon termination of the agreement
16. Creating procedures for addressing any disputes arising from the agreement
17. Specifying any alternative dispute resolution procedures that may be used to resolve disputes
18. Establishing applicable governing law for disputes arising from the agreement

Get started

Identifying the parties involved in the agreement.

• Determine who the parties are in the agreement and the roles they will play
• Identify what each party intends to gain from the agreement
• List the names, contact information, and addresses of all parties involved in the agreement
• Verify that all parties involved in the agreement are in agreement with the terms
• When all parties have been identified and are in agreement, check this step off your list and move on to the next step.

Defining what confidential information is included in the agreement

• Make an inventory of the information that the parties involved will consider confidential
• Identify the type of confidential information that is subject to the agreement, such as financial information, trade secrets, proprietary information, customer lists, or other sensitive information
• Describe the confidential information in detail
• Include any additional information that should be considered confidential
• When finished, review the list to make sure that all confidential information is represented
• When you’re confident that all the confidential information has been included, you can check off this step and move on to the next step - Establishing the scope of confidential information subject to the agreement.

Establishing the scope of confidential information subject to the agreement

• Identify the types of confidential information that will be subject to the agreement
• Detail the parties included in the agreement, such as the client and any third-parties
• Ask the client for any other information or data that should be included in the agreement
• Specify any restrictions or limitations on the use of confidential information
• Draft the agreement to include all of the above information
• Have the client review and sign the agreement

When you can check this off your list:

• When the agreement has been drafted and reviewed by the client, and they have signed the agreement.

Specifying any exceptions or exemptions to the scope of confidential information

• Identify any specific types of information that are not subject to the agreement
• Detail any exemptions to the scope of confidential information
• State the parties involved that are exempt from the agreement
• List any exceptions to the agreement
• Include any relevant laws that may exempt certain information from the agreement
• Include a section that outlines how confidential information can be used and disclosed

Once you have identified any exceptions or exemptions to the scope of confidential information, you can move on to the next step of establishing a timeline of when the agreement begins and ends.

Establishing a timeline of when the agreement begins and ends

• Decide on a start date for the agreement
• Decide on an end date for the agreement
• Specify any rules that govern when the agreement begins
• Specify the event or circumstances that will end the agreement
• Summarize the timeline of when the agreement begins and ends

Once these steps are completed, you can check them off your list and move on to the next step.

Establishing the consequences of a breach of the agreement

• Outline the legal consequences of a breach of the agreement by either party
• Include any damages that are due to the other party, such as financial or other damages
• Make sure the language is clear and concise and easy to understand
• Include any remedies available to either party in the event of a breach
• Make sure that any remedies are specific and in accordance with the laws of the state, or other relevant jurisdiction
• When finished, review the agreement with a lawyer to ensure it is legally enforceable

When you can check this off your list and move on to the next step: Once you have outlined the legal consequences of a breach of the agreement, the remedies available to either party, and reviewed the agreement with a lawyer to ensure it is legally enforceable, you can move on to the next step.

Specifying any financial or other damages that may be awarded for a breach of the agreement

• Determine if damages should be awarded for a breach of the agreement
• If damages should be awarded, decide what type of damages should be available, such as monetary damages or specific performance
• Specify the amount of damages that may be awarded for a breach of the agreement
• Set a maximum limit for the amount of damages that may be awarded
• Decide who is responsible for paying the damages
• Include a provision for attorney’s fees and costs if a party to the agreement has to pursue legal action
• When all details have been determined and agreed upon, incorporate the section into the contract
• Once the section is included, make sure the parties acknowledge it and sign the agreement

Establishing the legal remedies available to the parties

• Set out the legal remedies available to each of the parties in the event of a breach of the agreement
• Determine who can seek remedies and what remedies they can seek
• Consider including a right of injunction or a right to damages in the event of a breach
• Outline the procedures the parties must follow to take advantage of the remedies available to them
• Make sure to include a statement in the agreement that the remedies are cumulative and not exclusive
• You will know that you have completed this step when you have a clear description of the legal remedies available to each of the parties in the event of a breach of the agreement.

Setting out what type of documents or materials must be kept confidential

• Identify the documents and/or materials that must be kept confidential, such as customer lists, financial information, intellectual property, etc.
• Specify the confidential information as clearly and comprehensively as possible.
• Include a clause in the agreement that states that both parties will have to treat all documents and materials provided to them as confidential.
• When you are done, make sure the clause is written clearly and comprehensively so that both parties understand their obligations in regards to the confidential information.

How you’ll know when you can check this off your list and move on to the next step:

• When the clause is written clearly and comprehensively, and both parties understand their obligations in regards to the confidential information, you can move on to the next step.

Establishing protocols for the handling of confidential information

• Establish and document procedures for identifying confidential information and the ways in which it must be handled.
• Decide who will have access to confidential information, and determine how it will be shared and stored.
• Create protocols for the secure transmission of confidential information, including encryption of emails and other documents.
• Determine whether confidential information can be shared with third parties, and if so, create protocols for doing so.
• Document any processes for responding to requests for access to confidential information.

Check off this step when you have taken the necessary steps to establish protocols for handling confidential information, documented the procedures for doing so, and determined who will have access to the confidential information.

Specifying any required security measures for the storage or transmission of confidential information

• List any security measures that must be taken to protect the confidential information, such as encryption and passwords
• Specify how the confidential information will be stored and transmitted
• Include rules prohibiting the use of public networks or unsecured systems for the storage or transmission of confidential information
• Outline the steps that must be taken to ensure the security of confidential information
• When appropriate, require the use of secure systems or technologies that are authenticated by a third-party

Once all of the security measures have been specified and agreed upon, you can move on to the next step.

Outlining the procedures for the proper disposal of confidential information

• Identify the types of confidential information to be protected
• Determine the best methods for disposing of confidential information
• Develop procedures for disposing of confidential information that meet legal and regulatory requirements
• Document the procedures for disposing of confidential information
• Train personnel on the procedures for disposing of confidential information
• Implement a system to monitor the disposal of confidential information
• When all of the above points have been completed, you can check this step off your list and move on to the next step.

Specifying the circumstances in which confidential information may be disclosed

• Define the circumstances in which confidential information can be disclosed
• Identify what type of confidential information is subject to disclosure
• Determine when a disclosure is acceptable (e.g. legal proceedings, government requests)
• Establish the process for obtaining approval for any disclosure
• Include restrictions on the use of confidential information after its disclosure
• When finished, review the agreement to ensure that all the circumstances in which confidential information may be disclosed are specified

Once all the circumstances in which confidential information may be disclosed are specified and you have reviewed the agreement, you can mark this step as complete and move on to the next step.

Establishing requirements for the parties to receive prior written consent before disclosing confidential information

• Identify the circumstances in which one party may need to disclose confidential information to a third-party
• Draft a clause which requires the disclosing party to receive prior written consent from the other party before disclosing confidential information
• Consider adding any additional provisions for the disclosure of confidential information to third-parties
• Review the clause and make sure that it is clear and understandable

When you can check this off your list and move on to the next step:

• When the clause has been drafted and reviewed to make sure that it is clear and understandable.

Establishing the obligations of the parties to return or destroy confidential information upon termination of the agreement

• Clearly define the obligations of the parties to return or destroy any confidential information upon termination of the agreement
• Note what must be destroyed or returned, and the timeline for compliance
• Specify the methods of destruction to be used when confidential information is to be destroyed
• Make sure that the parties are aware of their obligations to return or destroy confidential information upon termination of the agreement
• When complete, you should have a clear outline of the parties’ obligations to return or destroy confidential information upon termination of the agreement
• Once you have this step complete, you can move on to creating procedures for addressing any disputes arising from the agreement

Creating procedures for addressing any disputes arising from the agreement

• Decide if the parties will use arbitration, mediation, or another form of alternative dispute resolution to resolve any disputes arising from the agreement
• Decide which state laws will govern the dispute resolution process
• Specify which party is responsible for the cost of the dispute resolution process
• State if and how any confidentiality agreement is applicable to the dispute resolution process
• Determine the timeline for initiating the dispute resolution process
• When the step is complete, both parties should have an understanding of the process to be followed in case a dispute arises regarding the confidential information agreement.

Specifying any alternative dispute resolution procedures that may be used to resolve disputes

• Research the laws of the state or country in which the agreement will be enforced to determine what types of alternative dispute resolution procedures are available
• Consider which types of alternative dispute resolution procedures might work best for the particular agreement, including arbitration, mediation, or a panel of experts
• Include a clause in the agreement specifying which alternative dispute resolution procedures will apply in the event of a dispute
• Check that the clause is clear and easy to understand, and that it accurately reflects the agreed-upon procedures
• When you’re finished, make sure you have included a clause specifying alternative dispute resolution procedures in your agreement and have reviewed it to ensure accuracy and clarity.

Establishing applicable governing law for disputes arising from the agreement

• Identify the governing law that applies to the agreement - this is typically the law of the state or country where the client is located.
• Research any applicable legal requirements that may affect the agreement - such as limits on how much a client can be charged for legal services.
• Include a clause in the agreement that specifies the governing law that applies to any disputes arising from the agreement.
• Make sure the clause is clear and unambiguous so that there is no confusion as to which law will govern any disputes.
• Check that all parties agree to the governing law that has been established for the agreement.

Once you have identified the applicable governing law and included a clause in the agreement that specifies this law, you can move on to the next step.

FAQ

Q: How do I determine which jurisdiction my client confidentiality agreement should fall under?

Asked by Lilliana on January 12th, 2022.
A: The jurisdiction your client confidentiality agreement should fall under depends on the geographic location of your client and where the agreement will be enforced. Generally, most agreements are based on the laws of the country or region in which the client is located. For example, if your client is based in the US, then the agreement should fall under US laws. If they are located in Europe, then the agreement should fall under European laws. It’s important to consider all applicable laws when drafting an agreement. If you need help determining what laws apply to your situation, you may want to consult a lawyer who specializes in international law.

Example dispute

Suing a Company for Breaching a Client Confidentiality Agreement

• A plaintiff can raise a lawsuit against a company for breaching a client confidentiality agreement, and could potentially win if the plaintiff can prove that the company failed to protect the confidential information of the plaintiff.
• The plaintiff must be able to demonstrate that there was a valid client confidentiality agreement in place and that the company breached the terms of the agreement.
• The plaintiff must also be able to show that the company’s actions resulted in a tangible harm or loss, such as financial damages, a violation of privacy rights, or any other harm suffered by the plaintiff.
• The court may consider relevant evidence such as the agreement itself, any documents showing the breach of the agreement, and witness testimonies from both sides to determine the merits of the case.
• If the court finds that the company is liable for breaching the agreement, the plaintiff may be entitled to damages, including the cost of replacing the lost confidential information, any additional costs incurred as a result of the breach, or general damages for any non-financial harm suffered.

Templates available (free to use)

Allied Litigant And Confidentiality Contract Texas
Business Sale Confidentiality Agreement To Auction Bidders Nda
Company Acquisition Confidentiality And Non Disclosure Agreement Nda
Confidentiality And Invention Assignment Agreement
Confidentiality And Non Circumvention Contract
Confidentiality And Noncompete Agreement
Confidentiality And Proprietary Rights Agreement
Confidentiality And Restrictive Covenant Agreement
Confidentiality Contract Asset Purchases Cross Border
Confidentiality Contract Early Stage Company Unilateral Discloser Friendly
Confidentiality Contract General Mutual
Confidentiality Contract General Mutual California
Confidentiality Contract General Mutual New York
Confidentiality Contract General Mutual Texas
Confidentiality Contract General Simple Mutual
Confidentiality Contract General Simple Mutual California
Confidentiality Contract General Simple Mutual Florida
Confidentiality Contract General Simple Mutual Georgia
Confidentiality Contract General Simple Mutual Illinois
Confidentiality Contract General Simple Mutual New York
Confidentiality Contract General Simple Mutual Ohio
Confidentiality Contract General Simple Mutual Pennsylvania
Confidentiality Contract General Simple Mutual Texas
Confidentiality Contract General Simple Unilateral Discloser Friendly
Confidentiality Contract General Simple Unilateral Discloser Friendly California
Confidentiality Contract General Simple Unilateral Discloser Friendly New York
Confidentiality Contract General Simple Unilateral Discloser Friendly Ohio
Confidentiality Contract General Simple Unilateral Discloser Friendly Pennsylvania
Confidentiality Contract General Simple Unilateral Discloser Friendly Texas
Confidentiality Contract General Simple Unilateral Recipient Friendly
Confidentiality Contract General Unilateral Discloser Friendly
Confidentiality Contract General Unilateral Recipient Friendly
Confidentiality Contract Joint Venture
Confidentiality Contract Joint Ventures Cross Border
Confidentiality Contract Lending
Confidentiality Contract Mergers And Acquisitions
Confidentiality Contract Non Circumvention Clause
Confidentiality Contract Order Federal
Confidentiality Contract Us Style Cross Border Acquisitions
Confidentiality Contract Us Style Mutual Cross Border Commercial Transactions
Confidentiality Contract Us Style Unilateral Cross Border Commercial Transactions
Confidentiality Letter Agreement For Leasing Property Nda
Confidentiality Letter Agreement For Selling Or Leasing Property Nda
Confidentiality Letter Agreement For Selling Property Nda
Confidentiality Letter To Agree To Further Nda
Employee Confidentiality And Proprietary Rights Contract
Employee Confidentiality And Proprietary Rights Contract California
Employee Confidentiality And Proprietary Rights Contract Colorado
Employee Confidentiality And Proprietary Rights Contract Florida
Employee Confidentiality And Proprietary Rights Contract Georgia
Employee Confidentiality And Proprietary Rights Contract Illinois
Employee Confidentiality And Proprietary Rights Contract Indiana
Employee Confidentiality And Proprietary Rights Contract Louisiana
Employee Confidentiality And Proprietary Rights Contract Massachusetts
Employee Confidentiality And Proprietary Rights Contract Michigan
Employee Confidentiality And Proprietary Rights Contract Minnesota
Employee Confidentiality And Proprietary Rights Contract Missouri
Employee Confidentiality And Proprietary Rights Contract New Jersey
Employee Confidentiality And Proprietary Rights Contract New York
Employee Confidentiality And Proprietary Rights Contract North Carolina
Employee Confidentiality And Proprietary Rights Contract Ohio
Employee Confidentiality And Proprietary Rights Contract Pennsylvania
Employee Confidentiality And Proprietary Rights Contract Tennessee
Employee Confidentiality And Proprietary Rights Contract Texas
Employee Confidentiality And Proprietary Rights Contract Virginia
Employee Confidentiality And Proprietary Rights Contract Washington
Employee Confidentiality And Proprietary Rights Contract Wisconsin
Employment And Confidentiality Agreement
Employment Litigation Joint Prosecution And Confidentiality Contract Plaintiff Side
Hipaa Confidentiality Agreement
In Depth Confidentiality Agreement For Buying Shares Nda Individual Sellers
Intern Confidentiality Agreement
Investigations Confidentiality Request To Foia Officer Accompanying Production Of Documents To Cftc
Investigations Confidentiality Request To Foia Officer Accompanying Production Of Documents To Sec
Investigations Joint Defense And Confidentiality Contract
Investor Wall Crossing Script With Confidentiality No Trade Contract One Way E Mail
Investor Wall Crossing Script With Confidentiality No Trade Contract Two Way E Mail
Joint Defense And Confidentiality Contract California
Joint Defense And Confidentiality Contract Federal
Joint Defense And Confidentiality Contract Florida
Joint Defense And Confidentiality Contract Illinois
Joint Defense And Confidentiality Contract Massachusetts
Joint Defense And Confidentiality Contract New Jersey
Joint Defense And Confidentiality Contract Ohio
Konfidencialumo Sutartis Confidentiality Agreement En 20181111
Loan Finance Confidentiality Agreement Nda
Mutual Confidentiality Agreement
Non Disclosure And Confidentiality Agreement
Out Of Court Restructuring Confidentiality Contract General Unilateral Discloser Friendly
Out Of Court Restructuring Confidentiality Contract Unilateral Discloser Friendly Joinder Contract
Patent Litigation Confidentiality Contract Order
Playbook Template Confidentiality Contract General Unilateral Discloser Friendly
Property Confidentiality Contract Disclosing Friendly Party
Property Confidentiality Contract Recipient Friendly
Section 1983 Confidentiality Contract For Disclosure Of Police Officer Personnel And Disciplinary Records
Section 1983 Confidentiality Contract For On Site Inspection Of Law Enforcement Or Correctional Facilities
Simple Confidentiality Agreement For Buying Shares Nda
Standard Confidentiality Agreement
Vendor Confidentiality Agreement

‍