Confidentiality Agreement (Scotland)

What is a confidentiality agreement?

A confidentiality agreement (also referred to as a non-disclosure agreement/NDA) protects confidential information disclosed between two parties.

It creates enforceable obligations between the parties, namely that they will not disclose or use any confidential information to third parties for any purpose other than that set out in the agreement.

This agreement is designed for use in Scotland. A different agreement can be used where the parties are resident in either England and Wales or Northern Ireland.

A confidentiality agreement may be used in a number of different settings, including in an employment setting or alongside a business transaction.

What are the different types of confidentiality agreements?

This kind of agreement can be used to address different types of situations. It can be used where:

• one party is disclosing information (a 'one-way' disclosure)
• where two parties are sharing information with each other (a 'two-way' disclosure)

This document can be used where the parties to the agreement are resident in Scotland. A different agreement can be used where the parties are resident in either England and Wales or Northern Ireland.

Is it mandatory to have a confidentiality agreement?

No. It is not mandatory to have a confidentiality agreement attached to another form of agreement. However, a business may use this type of agreement to protect its intellectual property and trade secrets. A confidentiality agreement should only be used when necessary.

What cannot be included in the agreement?

This kind of agreement should not:

• prevent a person from reporting wrongdoing (this is known as whistleblowing)
• prevent a person from raising a regulatory concern
• prevent a person from raising allegations of bullying, harassment or discrimination

What are the prerequisites of the agreement agreement?

Before the agreement is signed, the restricted party should be provided with sufficient opportunity to read and understand the terms of the agreement. They should be afforded the opportunity to seek legal advice should they wish to do so. In an employment setting, the restricted party should be able to discuss the terms with a trade union representative.

Who can enter into the agreement?

Either party to the agreement may be a natural person. A natural person who is entering into a legal agreement should have full capacity (meaning that they are of sound mind). Generally speaking, they should be over the age of 16*.

A party may also be a corporate entity with its own legal personality (e.g. a company).

What can the duration of the agreement be?

The agreement should only remain in place for a period which is reasonable and necessary to protect the interests of the business. Typically, this will be between 3-5 years. Some information may need to be kept confidential indefinitely (such as important intellectual property or lists of customers).

What has to be done once the agreement is ready for signing?

The parties should sign the agreement in the presence of an independent witness.

If a party is a corporate entity, the party signing the agreement must have the authority to bind the party. Usually, this person will be a company secretary or director of a company, or a member of a Limited Liability Partnership (LLP).

Both parties should retain the final signed version of the agreement.

Is it necessary for the signatures to be witnessed?

Each party should sign the agreement in the presence of a witness, who will also sign the agreement. The witness should be over the age of 18, and should not be a party to the agreement.

What happens if the agreement is breached?

If one party does not comply with the agreement, the other party may initially send a warning notice to the other party. The other party may also wish to take steps to start court proceedings in the Civil Court. A party may seek an injunction (an order to prevent further information sharing) and damages for any losses incurred.

What must the agreement contain?

The agreement should include information to confirm:

• the identify the parties to the agreement
• the relevant definitions applicable to the agreement
• the permitted use of the confidential information and the relevant restrictions
• the measures that should be put in place to keep information safe and confidential
• specify how long the restrictions imposed by the agreement will remain in place for
• a clause, if appropriate, that employees and clients of a party cannot be approached or poached by the other party following any disclosure

Which laws apply to this kind of agreement?

The key legal provisions applicable to a confidentiality agreement are:

• The Employment Rights Act 1996 (where the agreement is reached in an employment setting)
• The Public Interest Disclosure Act 1998
• The Data Protection Act 2018
• The retained EU General Data Protection Regulation 2016/679 (UK GDPR)
• The Trade Secrets (Enforcement, etc) Regulations 2018, SI 2018/597

The Advisory, Conciliation and Arbitration Service (ACAS) provides detailed guidelines about confidentiality agreements in an employment setting.

Help from a lawyer

You can choose to consult a lawyer if you need help.

The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.