Drafting a confidentiality agreement: this is what should be included

Drafting a confidentiality agreement involves having one party, the recipient of the information, declare that they will keep confidential data secret and use it only for the agreed purpose. Because it is a unilateral declaration and not a mutual agreement, only the recipient signs. The provider shares the information and does not assume any duty of confidentiality themselves. A good statement is concise but contains a comprehensive definition of the information, the permitted use, a duration, and the consequences of a breach. Below, you will review the components that should be included.

The short answer

• Define which information is confidential and what falls outside of it.
• Limit use to the stated purpose and prohibit sharing with third parties.
• Set the duration, also for the period after the collaboration.
• Include a penalty clause so that you do not have to prove damage in the event of a leak.
• Have only the recipient sign; that is the difference compared to a confidentiality agreement.

Drafting a confidentiality agreement: start with the right format

Before you start drafting a confidentiality agreement, check whether a unilateral declaration is indeed appropriate. If the information flows in only one direction, the declaration is the pure choice: the obligation lies with the recipient, where the risk lies. If both parties share sensitive information, you need a mutual confidentiality agreement. If you choose the wrong form, you either assume unnecessary obligations or leave a risk uncovered.

The explanation does not need to be long. Half an A4 page with sharp phrasing works better than pages of standard text where the essence gets lost.

Definition of confidential information

This is the heart of the statement. Too broad and the agreement becomes unenforceable; too narrow and too much falls outside its scope. Describe concretely what is confidential and specify the exceptions.

• What is included: for example, figures, customer data, source code, recipes, price agreements, and working methods shared by the provider.
• What is excluded: information that is already public, that the recipient already lawfully knew, or that he develops independently without using the provided data.
• Form does not matter: orally, on paper, or digitally, everything falls under the definition.

Use and prohibition of sharing

Stipulate that the recipient uses the information exclusively for the stated purpose, for example, the assignment for which they were engaged. Any other use is prohibited. Additionally, regulate sharing with third parties:

1. Do not share with outsiders without prior written permission.
2. Own employees or subcontractors may only view the information if they assume the same confidentiality obligation.
3. Return or destruction of data and copies upon completion of the assignment.

Term and penalty clause

Determine how long the obligation applies. Usually, confidentiality continues after the end of the collaboration, often for two to five years. For genuine trade secrets, the duration may be longer, as long as the information remains confidential.

A penalty clause is almost always advisable. Damage caused by a leak is difficult to calculate, so agree on a fixed amount payable upon breach. The legal basis is Article 6:91 of the Dutch Civil Code. Keep the amount proportionate, as the court may reduce an unreasonably high penalty pursuant to Article 6:94 of the Dutch Civil Code. Optionally, combine a penalty per violation with an amount per day that the violation continues.

Signature and proof

Have the recipient date and sign before you share the information, not afterwards. Keep the signed copy. This is not only proof of the agreement, but also a reasonable confidentiality measure within the meaning of the Trade Secrets Protection Act. Without such a measure, that law offers no protection.

Practical example

A manufacturing company hires an external engineer to improve a machine. The engineer is shown drawings and settings that the company has developed over the years. The company draws up a confidentiality agreement with a strict definition of the technical information, a prohibition against sharing it with other clients, a term of five years, and a fine of 10,000 euros per violation. The engineer signs before commencement. If he later goes to work for a competitor on a similar machine, the company has a concrete basis to take action.

Honest recommendation

You do not need a lawyer to draft a simple declaration. With a single recipient, a manageable amount of information, and a reasonable penalty amount, a good template will get you a long way, provided the definition is correct and the duration is realistic. However, do seek assistance if the information is truly valuable: source code, recipes, a patentable idea, or large amounts of personal data. In that case, it pays to have the definition and penalty clause clearly formulated so that the declaration holds up if things go wrong. If you are unsure about the form, have a brief assessment done to determine whether a declaration or a mutual agreement is more appropriate.

First read exactly what a confidentiality agreement is and what it costs to have one drafted , or have a custom confidentiality agreement made immediately

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