Unilateral or Mutual Commitment?

In a unilateral confidentiality agreement, the recipient of confidential information or material makes a unilateral commitment of confidentiality to the party disclosing the information or material. Mutual confidentiality agreements are concluded when both parties possess confidential information or material that is either disclosed to the other party, or that the other party may obtain through other means.

The purpose of confidentiality agreements is to protect the interests of both parties. Whether a unilateral or a mutual confidentiality agreement is concluded, depends on whether both parties possess confidential information and in what way the information is divided between the parties. Naturally, the parties’ respective bargaining positions will also influence the outcome of the agreement. Since a mutual agreement may be more acceptable to the counterparty, a company may offer a stringent mutual agreement for tactical reasons, even if the company knows that it will only act as a party disclosing information.

It is prudent for a company to have templates for both unilateral and mutual confidentiality agreements. The templates should be tailor-made to the needs of the company, emphasizing the special characteristics of its line of business.