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A confidentiality agreement is a contract that keeps shared business information private. It binds the receiving party to keep named information secret and is also called a non-disclosure agreement. Businesses use this free template before sharing trade secrets with employees, contractors or buyers.
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A confidentiality agreement is a written contract in which one party promises to keep the other party's named information private and to use it only for the purpose the two of them agreed on. The agreement protects what gives a business its value, from trade secrets to customer lists.
The protected information usually falls into five groups:
The party that shares the information is the disclosing party. The party that receives it is the receiving party, also called the recipient. In a unilateral agreement only one party discloses. In a mutual agreement both parties disclose and both receive.
You need a confidentiality agreement whenever you are about to show someone outside your business information that would hurt you if it reached a competitor or the public. Sign it before the information changes hands, not after.
Employers often put a confidentiality clause inside their employment agreements, and a separate agreement fits many other moments:
In each case the agreement tells the recipient, in writing, which information is off limits and what it may be used for.
The table compares a confidentiality agreement with related documents and shows what each document is for.
| Document | Main purpose | Typical use |
|---|---|---|
| Confidentiality agreement | Keep named information private and limit its use | Employees, contractors, deals, partnerships |
| Non-disclosure agreement (NDA) | The same purpose under another name | The same situations as a confidentiality agreement |
| Non-compete agreement | Limit a person from competing with a business | Employees and sellers of a business |
| Employment contract | Set out the whole working relationship | New hires, with confidentiality as one clause |
A confidentiality agreement and an NDA do the same job: a party agrees not to reveal or misuse the other party's information. Both names describe the same kind of contract. What the document does depends on its clauses, not on its title.
A non-compete agreement limits whether a person may work for a competitor or start a competing business, while this agreement only limits what the person does with information. A confidentiality agreement on its own says nothing about where the person works next; it covers only the protected information. Both topics can be covered in a single contract or in separate documents.
An employment contract covers the whole working relationship: pay, duties, hours and ending the job. This agreement covers a narrower topic, the handling of private information, so it can sit inside the employment contract as a clause or stand alone. A standalone agreement also works for people who are not employees, such as contractors and business partners.
A confidentiality agreement lasts for the period the parties write into it: a set number of years, the length of a project plus a tail period, or until the information becomes public. There is no single standard term, so the parties pick one that matches how long the information keeps its value.
The FormsPal template gives you two options. You can check the box for an indefinite period, or you can type a number of years counted from the date of the agreement.
Before you choose, ask how long the information will stay valuable. A product plan may lose its value quickly, while a customer list can stay useful for years.
Whatever the term, the duty usually ends early for information that becomes public through no fault of the recipient. Trade secrets such as a formula or source code are often protected for as long as they stay secret, which is why the indefinite option exists.
To write a confidentiality agreement, pick a template, decide who discloses, list the protected information, set the consequences of a breach, sign, and only then share the information. You can draft it yourself or work with an attorney; the steps are the same either way.
Start from a template that fits the relationship: an employee, a contractor, a partner or a buyer. A template gives you the standard clauses, so your work is to fill in the parties, the information and the term, and to cut anything that does not fit your deal.
If the information is worth a lot, or the other side sends you its own draft, an attorney's review helps you make sure nothing you care about is left out of the definition.
The agreement takes one of these forms, depending on who shares information:
The definition of confidential information is the part of the agreement that needs the most care, because information left out of it is not covered. Describe the categories clearly, such as source code, pricing, customer lists or product designs, and add any specific items by name.
Include material connected to the core information, such as notes, analyses and copies the recipient makes from it. Avoid a definition so wide that it covers everything the recipient ever hears, because a vague definition is harder to apply when a dispute comes up.
The breach clause tells the recipient what follows if the information is shared without permission, whether by accident or on purpose. Agreements commonly provide for money damages for the disclosing party's losses and for an order to stop further disclosure. Writing these remedies down in advance gives both sides a clear picture of the stakes.
Each party signs, prints its name and adds its title. Before signing, confirm that the person signing for a company has authority to sign contracts for it, such as an owner, an officer or a manager named for that purpose. Compare the signer's name with a photo ID if you have not met before.
Share the information only after every party has signed. Mark documents as confidential when you send them, and keep a list of what you shared and when. The recipient should keep the information to itself and pass it only to the people the agreement allows.
To fill out the FormsPal confidentiality agreement template, enter the date and both parties, choose mutual or unilateral, list the protected information, pick the term and sign. Only a few parts of the form are fill-in fields, and the rest is fixed text that you read but do not change.
The screenshots under each step show the FormsPal Confidentiality Agreement template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Prefer to type on screen? Download the PDF and complete it with an online PDF editor before you print.
A complete confidentiality agreement includes the parties, a definition of confidential information, exclusions, limits on use and disclosure, the term, the return of materials and the consequences of a breach. Most of the FormsPal template is fixed text that already covers these points; use this list to review your own draft or one the other side sends you.
The opening names each party with its full name and address and gives the date the agreement takes effect. A short purpose line, such as "to evaluate a possible supply deal", tells both sides why the information is being shared and limits its use to that purpose.
The definition sets the scope of the whole agreement. Good definitions name categories and give examples, and they say whether information shared orally counts, for example when it is confirmed in writing afterwards.
The exclusions clause lists information the agreement does not cover. Typical exclusions are information that:
This clause says what the recipient may do with the information and who else may see it. A common pattern lets the recipient share it with its own staff or advisers who need to know it and who are bound to keep it private. For example:
“The Recipient may disclose Confidential Information only to its employees and advisers who (i) need to know it for the Purpose and (ii) are bound in writing to keep it confidential.”
The return clause says that the information stays the disclosing party's property and that the recipient hands back or destroys documents, copies and notes on request or when the relationship ends. Some agreements ask the recipient to confirm in writing that this has been done.
The closing section usually covers:
Under 18 U.S.C. § 1833(b), an employer shall give notice of the whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. Under 18 U.S.C. § 1833(b)(3)(D), this notice duty applies to contracts and agreements entered into or updated after May 11, 2016.
The immunity in 18 U.S.C. § 1833(b) covers a trade secret disclosed in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or disclosed in a court filing made under seal. For this notice, 18 U.S.C. § 1833(b) counts a contractor or consultant working for the employer as an employee. Under 18 U.S.C. § 1833(b), a cross-reference to a policy document that sets out the employer's reporting policy for a suspected violation of law counts as notice. If the employer gives no notice, 18 U.S.C. § 1833(b) bars it from being awarded exemplary damages or attorney fees under 18 U.S.C. § 1836(b)(3)(C) or (D) in an action against an employee to whom notice was not provided.
To sign a confidentiality agreement, have each party read both pages, sign on its By line and print its name and title, then give every party a signed copy. Take a final look at the fixed clauses too, so every party knows what it is agreeing to.
The template has no notary block. Sign before any information is shared, keep the signed copy where you can find it if a question comes up later, and remind people of the agreement when they leave the job or the project ends.
Whether a confidentiality agreement holds up depends on its wording and on the facts of the dispute, so no template can promise the outcome. Clear, limited terms that both sides understood when they signed give an agreement its best footing.
Federal law limits these agreements in some situations. Three examples follow. Under the Speak Out Act, Pub. L. 117-224, a nondisclosure clause agreed to before a sexual assault or sexual harassment dispute arises is not judicially enforceable in that dispute when the conduct is alleged to have violated Federal, Tribal or State law. The Speak Out Act, Pub. L. 117-224, applies to claims filed on or after December 7, 2022. The Speak Out Act, Pub. L. 117-224, does not stop an employer and an employee from protecting trade secrets or proprietary information. Under SEC Rule 21F-17, 17 CFR 240.21F-17(a), no person may enforce or threaten to enforce a confidentiality agreement to stop someone from communicating directly with SEC staff about a possible securities law violation. The employee notice of 18 U.S.C. § 1833(b), described in the section on what to include, is a third federal rule.
State law can add its own limits. Washington, for example, sets rules on prohibited nondisclosure and nondisparagement provisions in RCW 49.44.211, so check the rules of the state where the agreement applies as well.
Before you sign, or before you send your draft, check it against these questions:
A definition that covers everything is the most common weak point: it leaves the recipient unsure what is protected. A restriction that reaches far beyond the information, such as a lifetime ban on working in an industry, is a non-compete in disguise. If a whole group of recipients sees the same information, every one of them should sign; information handed to one person with no agreement can reach the public and lose its protection for everyone.
For a high-value deal, an attorney licensed where you do business can tell you how these clauses are treated there.
A simple confidentiality agreement is a short contract that names the parties, defines the protected information, lists exclusions, limits its use, sets a term and ends with signatures. The FormsPal template follows that shape.
Example: "Acme Design agrees to keep Bright Foods' product recipes and supplier list confidential, to use them only to prepare packaging designs for Bright Foods, and to return all copies when the project ends."
Yes, you can draft one yourself from a template, and many businesses do. In most situations a template covers the standard protections. An attorney's review makes sense when the information is very valuable, when the other side sends its own draft, or when the agreement also limits competition.
Employees who handle customer data, finances, strategy, code or other private information should sign one, ideally on or before their first day. Staff who never see such information may not need it. Under 18 U.S.C. § 1833(b), an employer shall give notice of the whistleblower immunity in an agreement with an employee that governs a trade secret or other confidential information, entered into or updated after May 11, 2016; a cross-reference to the employer's reporting policy counts as notice. The employer adds this notice of 18 U.S.C. § 1833(b) to the agreement if the template it uses does not already carry it.
The applicant decides whether to sign, and the employer decides whether to keep the person in the hiring process. Asking which clause worries the applicant often settles it, since a narrower definition or a shorter term may be acceptable to both sides.
No, you can ask a current employee to sign one at any time. Asking at the start of the hiring process is still better, before the person sees any protected information. For an agreement added mid-employment, ask an attorney what the employee should receive in return where you operate.
Information that is already public, that the recipient knew before, that the recipient developed independently or that the recipient got from someone free to share it is usually excluded. The exclusions clause lists these cases in writing.
Yes, an agreement that reaches too far can cost an employer good staff. If a new agreement handed to current employees also bars them from side businesses or competing work, some of the most valuable people may choose to leave rather than sign. Keep the agreement to the information itself and handle competition separately, if at all.
To see how the clauses fit together, open the free confidentiality agreement template and fill in your own details.
General information, not legal or tax advice.
