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Are you wondering when it is advisable to enter into a confidentiality agreement with a contractor or employee, and whether it is necessary at all? We provide guidance on the conditions a confidentiality agreement should meet to be considered valid. Check what provisions are worth including and what the consequences are for breaching its terms.
A Non-Disclosure Agreement (NDA), or confidentiality agreement, is categorized as an unnamed contract. Why is this, and what are the implications? Details regarding NDAs are not regulated by any legal act and are concluded under the principle of freedom of contract. In practice, it is an extensive confidentiality clause, and no legal provisions specify the formal requirements a confidentiality agreement must meet. The only provision to be adhered to when drafting a confidentiality agreement is Article 3531 of the Civil Code, concerning the freedom of contract. It states that: Parties entering into a contract may shape their legal relationship at their discretion, provided that its content or purpose does not contravene the nature of the relationship, the law, or principles of social coexistence.
An NDA is concluded between two parties:
the party disclosing confidential information,
the party receiving confidential information.
It can be concluded between:
an employer (or principal) and an individual providing work or services for them,
two business entities.
This means that an NDA can be concluded with an employee, contractor (including potential ones), subcontractor, client, or supplier. What are the legal effects of a confidentiality agreement? The purpose of an NDA is to protect one's interests. Under its terms, the parties agree to keep confidential the information exchanged in connection with their business relationship. An NDA specifies the terms under which information may be disclosed. It also outlines the consequences for breaching its terms. Thus, the parties protect themselves against the risk of damage that may arise from engaging in cooperation with a particular entity.
When is the appropriate time to sign a confidentiality agreement? If you intend to enter into a confidentiality agreement with an individual or employee, it is best to do so before commencing discussions about cooperation. Why? Because at this stage, an offer is presented, along with certain confidential data. An NDA is concluded only with a party that could potentially disclose confidential information, as without the agreement's provisions, there is no obligation to maintain secrecy related to the profession (e.g., an external company conducting an audit within a firm). However, this does not mean that obtained information can be made public. It concerns maintaining business secrecy, i.e., information that is not publicly available but holds value for the enterprise. Who is bound by professional secrecy? This group includes doctors, attorneys, legal advisors, notaries, soldiers, and psychologists. There is also banking secrecy, which covers all activities conducted as part of a bank's service operations.
A confidentiality agreement does not need to be a separate document – its provisions can be incorporated into another agreement. At the same time, there are no objections to signing an NDA as a standalone agreement, which, upon acceptance by both parties, will be signed. It is worth noting that legal regulations do not govern the components of a confidentiality agreement or its form. In practice, this means that an NDA is valid whether concluded in writing or orally. However, before deciding to enter into a confidentiality agreement with an employee in a form other than written, with signatures from both parties, consider whether you will be able to prove the allegations in the event of non-compliance.
As we have established, legal regulations do not specify what exactly should be included in a confidentiality agreement. Therefore, it can pertain to all information that a party does not wish to make public. A confidentiality agreement NDA is a solution not reserved solely for large enterprises, and increasingly, small entities, keen on protecting their interests, decide to enter into it. Information that may be considered confidential includes financial matters – both sources of financing and data on financial status and payment information. Technological processes, production methods, or formulas may also be classified as secrets. NDAs also include provisions regarding the confidentiality of passwords and access codes. Perhaps you plan to share a new employee training idea or a developed business plan with a new collaborator or subcontractor? In such a situation, it is also worth ensuring the security of your interests by entering into a confidentiality agreement.
Like any other contract, a confidentiality agreement should clearly identify the parties, with basic data including: company name, legal form, registered office, address, KRS number, NIP, REGON, and the name of the registration court. It must also include information on who represents the party to the agreement (it must be a person authorized to undertake this action), as in the event of a dispute, it may turn out that the confidentiality agreement was signed by someone without the authority to do so.
To maximally protect your interests, it is advisable to specify in the agreement exactly what information is considered confidential. Ensure that the NDA is constructed in such a way that in the event of a dispute, neither party has any doubts about the meaning of its specific provisions. There is no official list of data to be considered confidential. However, they are defined as those that have any value for the enterprise. It is important to specify the period during which the agreement's provisions will apply. Why is this important? Because if the agreement is signed for an indefinite period, it may be terminated by either party, posing the risk of disclosing confidential information.
Is a confidentiality trust agreement with an individual possible? Absolutely! The principles for drafting it are exactly the same as in the previously mentioned cases. It is even recommended if the cooperation occurs between sole proprietorships. Each party has the opportunity to enter into a confidentiality agreement and precisely indicate which information is protected by secrecy. We reiterate that it is worth ensuring that only specific provisions are included in the NDA. It is necessary to carefully define not only the list of confidential information but also to clarify what is meant by confidentiality. It can be specified, for example, that it concerns the disclosure, transfer, sharing, or use of data. The highest level of protection is achieved by precisely defining what is meant by each of these terms. Additionally, the NDA should include an obligation for the party to properly secure the received data. You may request the return of data collected during the cooperation or demand its destruction. Each issue should be thoroughly described in the agreement. Remember, a confidentiality agreement is concluded in case of a dispute. It is highly likely that it will never be used, yet it is worth having additional protection.
Employees are obligated to confidentiality in accordance with the provisions of the Civil Code and the Act of April 16, 1993, on Combating Unfair Competition. Article 100 of the Labor Code states that an employee is obliged to: care for the welfare of the workplace, protect its property, and keep confidential information whose disclosure could harm the employer. This obligation begins at the moment of signing the employment contract, and the employer does not need to decide to enter into an additional confidentiality agreement. However, there is no law prohibiting this. If the employer needs to establish specifics regarding confidentiality, it is in their interest to sign an NDA. This is recommended if the employee will have access to information whose disclosure carries the risk of negative consequences for the enterprise. It is important to specify which information holds economic value for the employer and which cannot be disclosed beyond a select group. As mentioned, there is no need to enter into an additional confidentiality agreement, as it is possible to extend the content of the employment contract (or an annex or regulation) with additional confidentiality clause provisions. What else is worth establishing when entering into a confidentiality agreement with an employee? It is necessary to specify the period during which the confidentiality clause and the non-compete clause apply, even after the termination of employment.
When signing a confidentiality agreement, for example, with a subcontractor, it is advisable to ensure that the NDA provisions also cover their employees. This does not mean you need to require each collaborator's signature on the document, as it will suffice for the other contracting party to be responsible for their employees.
If a party has committed to confidentiality and fails to comply, they may be held liable under general principles. This means liability for the damage incurred, improper performance, or non-performance of the obligation, which translates into the payment of damages. Specifying the amount of damage incurred is not easy, which is why confidentiality agreements include a provision on contractual penalties. This is the simplest and safest measure, aimed at disciplining the other party. Why is this solution chosen more often? Because it suffices to prove a breach of the agreement's provisions without the need to demonstrate damage. It is necessary to clearly specify the situations in which such a sanction may be imposed. A common practice is also to include a provision regarding the possibility of immediate termination of the cooperation agreement if confidential information is disclosed.
Although a confidentiality agreement is not precisely defined by legal regulations, we encourage you to be meticulous in this matter and create specific, understandable provisions. An NDA is intended to serve as additional protection for your interests, so it is worth doing it with due diligence. Remember to meet the basic formal requirements to ensure the agreement's validity.
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