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When running your own business, you may want to protect confidential information, such as trade secrets or other commercially valuable information. In that case, you should sign a confidentiality agreement or non disclosure agreement (NDA) before sharing any ideas or information with people outside your business. This agreement will help you formalise your relationship with the receiver of the confidential information and provide you with legal remedies if they do not fulfil their obligations. Some situations in which you may need to sign an NDA include disclosing sensitive information: to an employee or contractor; as part of a purchase or sale; or about an invention. This article explains what Commercial in Confidence (CIC) means in New Zealand and what you should include in a confidentiality agreement to protect your business.

What Is Commercial in Confidence?

Commercial in Confidence (CIC) refers to confidential information about your business that has a specific purpose. It includes any information that the receiver acquired throughout a commercial relationship with you, such as:

  • market position;
  • trade secrets;
  • customers’ personal information;
  • commercial contracts;
  • intellectual property;
  • financial statements; and 
  • key partnerships.

What Information Should You Treat As Commercial in Confidence?

Your confidentiality agreement sets out obligations for the recipient to not use or disclose it, other than for the purpose agreed. Therefore, two critical definitions in this agreement are ‘confidential information’ and ‘permitted purpose’.

You should clearly state what commercial information is confidential without making this definition too broad. Being too general could potentially undermine the protection of confidential information and make it more difficult for the other party to comply with it. 

However, you can be as specific as you need to. For example, you can include individual categories in the definition of confidential information, such as contracts, financial details, customer lists, employee details or software. You can also carve-out particular information, such as:

  • any information that is already publicly available;
  • information that the receiver already knows; and
  • information obtained from a third party who’s not bound by the confidentiality agreement.

Tip: You can use a template to draft your confidentiality agreement. However, make sure that you are preventing the receiver from using confidential information for their benefit, removing any limitations of term and capturing situations where the receiver makes improvements to the information.

What Should You Include in Confidentiality Agreements or Non Disclosure Agreements? 

If you are using a standard confidentiality or NDA template, you may only need to specify who is the discloser and receiver, and outline the purpose of the disclosure. However, a more detailed NDA will give your business greater control over the information you disclose to others and save you potential litigation costs. Therefore, you should consider other critical elements when drafting your agreement, such as:

  • if there is more than one receiver, how you will apportion the liability between them;
  • who will gain access (directly or indirectly) to the confidential information and how they could use it;
  • the type of entity and financial position of the receiver; 
  • whether the confidentiality agreement should be mutual;
  • additional restrictions on the use of the information to compete with you (the discloser);
  • what should happen in a case where disclosure is required by law; and 
  • if the confidential information should be returned or destroyed and when.

Key Takeaways

Generally, you can protect CIC information about your business using confidentiality clauses or agreements to prevent its unauthorised use. You should specify what information should be confidential, who is the discloser and receiver of the information and their obligations in regards to its disclosure. Therefore, whenever you need to share sensitive information about your business with another party, you should ask them to sign an NDA before disclosing the information. However, if you have already disclosed it before signing, you may still be able to protect it. You can discuss your options with your lawyer.

If you need help with drafting or reviewing your confidentiality agreement, LegalVision’s contract lawyers can help. Call 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What does commercial in confidence mean?

Commercial in confidence generally refers to sensitive information about your business that you share with another party in confidence. Therefore, the person receiving this information must not use or disclose it without consent.

What are examples of commercially sensitive information?

Commercially confidential information includes sensitive information that you may disclose to an employee or contractor, as part of a purchase or sale, or about an invention. For example, trade secrets, contracts, customers’ or employees’ information, financial documents, market position, designs and software.

What should I include in a confidentiality agreement or non disclosure agreement?

You can use a standard confidentiality or NDA template to define what should be confidential, specify who is the discloser and receiver of the information, and outline the purpose of the disclosure. However, a more detailed NDA will consider other critical elements such as who will gain access (directly or indirectly) to the confidential information and how they could use it, or when the specified information should be returned or destroyed.

What do I do if there has been a breach of confidence?

If you think the other party to the agreement has committed a breach of confidentiality, you can take legal action against them. However, engaging in litigation is typically an expensive and drawn-out process, so you should try to resolve the matter outside of court.

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