Confidentiality agreements function as a contract between two or more parties stipulating that certain sensitive information exchanged between them will not be discussed elsewhere. People are free to enter into contracts with one another on their own terms. Oftentimes contracts specify what actions will be taken between parties; however, a confidentiality agreement specifies what actions the parties will keep from taking. Entering into a definitive confidentiality agreement makes clear what information can and cannot be disclosed and if some information is to be disclosed, to what extent. Doing so protects the interests of all of the parties involved. There is essentially no difference between a confidentiality agreement and a non-disclosure agreement; they are both in place to preserve the confidentiality between parties. If an agreement is to be considered a non-disclosure agreement, it will be stipulated as such in the contract.

Confidentiality agreements are not bound to one specific category of relations, rather are used frequently among various day to day transactions. In general, the sensitive information protected by these agreements relates to such information that a business or entity may not want the general public or competitors to know about. Many businesses require employees to enter into confidentiality agreements when such work deals with technological information, patents, and other such information. Businesses that hire independent contractors also typically include a confidentiality agreement regarding confidential information about the company if need be. Banks are another entity that can oftentimes require confidentiality agreements regarding loan information, and other such procedural information that would be detrimental if put in the hands of competitors. There is no set list of what information can fall under a confidentiality agreement. It depends on what language and information is included in the contract that is drafted creating the confidential relationship. Most agreements stipulate a durational period for the confidentiality, depending on the circumstances a confidential agreement can have an end date, or last indefinitely.

When a confidentiality agreement is broken, it is treated as a breach of contract and contract law governs. When a breach of contract occurs, the non-breaching party may choose to file a lawsuit against the breaching party for relief. Often an agreement will include a remedy clause dictating what remedies will be available for the non-breaching party. If not, a suitable remedy will be determined by the court. Remedies for breach can either be damage for the harm caused or an injunction, a court order demanding the breaching party to stop the harmful behavior.

Because confidentiality agreements are entered into freely between the parties as contracts, contract law governs. There is no definitive statute in the Minnesota Statutes relating to the creation and breach of specific confidentiality agreements. The Restatement (Second) of Contracts is a useful resource, although not binding precedent, regarding conditions upon breach of contract.

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