Business Law | DL Blog

Mar 04

Independent Contractor Agreement: NEW DL LEGAL FORM + VIDEO GUIDE!

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Here comes Legal Form + Video Guide #3:

Independent Contractor Agreement (Client) – No Schedules

This Agreement can be used by a Client who wants to engage the services of an Independent Contractor (e.g. a consultant, a professional, a general worker, etc.) without creating an employment relationship. The “Client” means that this Independent Contractor Agreement favours the Client – for example, through notice, termination, standards of care, and restrictive covenants, etc. The “No Schedules” means that there are no schedules in this particular Independent Contractor Agreement – although some have a Statement of Work or Description of Work, etc. This one does not. There will be different versions of this agreement which favour both the Client and the Independent Contractor and which may include Schedules. Schedules aren’t absolutely necessary. They’re just one way of having an agreement instead of writing things out in the actual agreement, you simply modify the Schedule. Here’s the sample Video Guide that comes with this Independent Contractor Agreement (Client) – No Schedules:

written by admin \\ tags: consulting agreement, contractor agreement, contractor template, customizable, independent contractor agreement, lawyer prepared, legal form, video guide

Feb 13

Consulting Agreements | Independent Contractor Agreements… (Part 4)

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to becoming an independent contractor, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Ontario business lawyers in this regard. You can also contact me directly at michael@carabashlaw.com.

As a follow up to my last blog, in this blog, I’ll be discussing some of the basic terms you may find in a standard independent contractor agreement.

Expenses, Taxes, and Withholdings
The agreement should be clear who is responsible for expenses incurred in the course of the independent contractor offering the services. Such expenses include travel, accommodation, meals, equipment (which includes costs associated with acquiring, maintaining, replacing, renting, transporting, insuring, and disposing of equipment), etc. That said, when it comes to taxes and withholdings, it’s customary for the Contractor to be responsible for withholding and remitting its own taxes, CPP, EI, WSIB, etc. (and the costs of procuring those and other benefits).

Term and Termination
You’ll also want to discuss the term and method of terminating the agreement. In the latter, the Client will typically want to include the concept of Just Cause (e.g. which could include serious misconduct or breach of the independent contractor agreement), which a client can raise to terminate the independent contractor at any time and without the requirement to provide notice or payment in lieu thereof. You’ll also find termination provisions dealing with a party unilaterally ending the contract by simply providing notice or by mutual written agreement. You can, if you wish, add further termination clauses such that the agreement is terminated on the death or bankruptcy of one of the parties, or if one of the parties attempts to make an assignment contrary to the agreement.

Confidentiality and Non-Disclosure
The Client may want to include provisions dealing with confidential information. It’s best to do this through a separate written agreement, as this can make the independent contractor agreement bulky (i.e. you’ll end up adding 5-10 more pages for a confidentiality and non-disclosure agreement).

Proprietary Rights
This section of the agreement deals with who owns proprietary rights and enhancements to those proprietary rights during the course of the engagement and thereafter. You should give careful consideration to defining the proprietary rights as all of the provisions related to it flow from what it includes.

Non-Compete, Non-Solicitation, Non-Disparagement
Non-compete clauses are designed to protect the Client by preventing the Contractor from competing in the Business (recall that this is a defined term) during and after the term of the contract. Non-solicitation clauses are another form of restrictive covenant whereby the Contractor agrees not to solicit Customers or employees of the Client. Finally, Non-Disparagement clauses are meant to prevent the Contractor from making defamatory statements against the Client. Make sure to have a lawyer review these clauses for you if you have any doubts as there are strict legal tests that must be met in order for these clauses to be enforceable.

Injunctive Relief
The Client will want to be able to bring an interlocutory injunction (think of it like a mini trial prior to the trial) to the court to require the allegedly offending party to stop competing (due to the irreparable harm they caused) until the entire matter is disposed of at trial. This remedy does not require that the Client actually prove damages and is in addition to other remedies which the Client may have in the contract or elsewhere (e.g. based on negligence).

Indemnification
You should spell out in this section that the Contractor will indemnify (i.e. pay for) the Client for all claims related to the Contractor’s failure to remit taxes, CPP, EI, failure to abide by laws, or negligent performance of the Services. Remember: this section is a negotiation point and the language can always be tweaked.

General Terms
The end of the Independent Contractor Agreement should include general terms to help fill in certain blanks about the agreement, how it is to be entered into or interpreted, etc. Some of these terms include:

Acknowledgments: the parties acknowledge that they’ve read the agreement, understood it, believe it to be fair and reasonable, have had independent legal advice regarding it, and are entering into it freely
Assignment: can this be done at all, by one of the parties, by both parties consenting in writing?
Amendment: can this be done at all, for example, by both parties consenting in writing?
Entire Agreement: i.e. this agreement supersedes all other agreements – whether oral or written – relating to the same subject matters in the agreement
Governing Law: which jurisdiction governs the interpretation and enforcement of the agreement?
Interpretation: singular vs. plural; masculine vs. feminine, section headings, etc.
Severability: in case one provision is struck down and rendered invalid doesn’t mean the rest of the agreement is
Survival of Terms: which terms, if any, survive the expiration or termination of the agreement?
Waiver: e.g. no failure or delay of a party to enforce or exercise its rights under the agreement constitutes a waiver

Signing
The final section of the agreement (other than any schedules or exhibits) requires that the parties (or their duly authorized representatives) to sign and deliver the agreement. Signing the agreement without delivering it is not enough to make the agreement effective. There must be delivery. While not a legal requirement, it is good practice that witnesses be present and sign their names alongside the parties’. Also, it is also good practice for the parties to initial their names on the bottom right hand corner of every page.

Remember, if you need a lawyer to review, draft, revise, negotiate or resolve a dispute concerning an independent contractor | consulting agreement, make a post on Dynamic Lawyers or contact me directly at michael@carabashlaw.com.

In case you’re a Client and looking to engage the services of an Independent Contractor in Ontario, look no further:

Independent Contractor Agreement (Client) – No Schedules

All of Dynamic Lawyers‘ legal forms are lawyer-prepared, simple to read, easy to customize, and only a fraction of the price a lawyer would charge. Also, each legal form comes with a FREE VIDEO GUIDE (watch a useful example of how this legal form can be customized), a FREE DL GUIDE (read helpful information about this legal form), and another FREE DL GUIDE that sheds valuable insight into how legal forms can be challenged. What are you waiting for? Best of all, if you DO need a lawyer and need some legal advice, simply make a post and get FREE quotes from Ontario lawyers focusing on the area of law you require!

written by admin \\ tags: independent contractor, independent contractor agreement, independent contractor template

Feb 13

Consulting Agreements | Independent Contractor Agreements… (Part 3)

Business Law 1 Comment »

As a follow up to my last blog, in this blog, I’ll be discussing some of the basic terms you may find in a standard independent contractor agreement.

Relationship
This part is important. The parties are separate and independent. They’re not creating a partnership, joint venture, franchise or employment relationship. If they do end up creating one of these other relationships, the Client could be increasing its risk and liability when it comes to complying with legislation that governs those business relationships. The classic scenario involves an Independent Contractor being terminated and wanting what it is entitled to under the Employment Standards Act (Ontario), as amended. There are minimum notice and severance requirements under that Act which “employees” are entitled to. If the Independent Contractor claims them against the Client, the client will need to defend itself by showing that the relationship was not employee-employer but one of Client-Independent Contractor. This will be shown be looking at the relationship in all of the circumstances (e.g. how the work was done by the independent contractor, who owned the tools, how the contractor was paid, whether the contractor could earn more profit and risk losses, whether the contractor had multiple clients, etc). Remember: the test to determining whether a worker is an employee or independent contractor differs based on the legislative context ¬– e.g. Employment Standards, Workplace Safety, Income Tax, etc.

Payment
In this part, you’ll want to discuss what the independent contractor will get paid, how often, and whether the Client can validate the invoices before paying. You can also attach as a Schedule a draft form for the Contractor to use as an invoice. Alternatively, you can simple state that the invoice will be “in form and substance satisfactory to the Client”.

Materials and Equipment
Typically, the Independent Contractor is the one who owns the tools to perform the Services. Sometimes, tools may be provided by the Client, although this is more an indication that the relationship is one of the employee-employer instead of client-contractor. You may want to include language here that deals with the Client lending its tools temporarily to the Contractor and requiring the Contractor to be responsible for loss or damage to those tools.

Still more terms to discuss coming up in the next and final blog on this topic…

In case you’re a Client and looking to engage the services of an Independent Contractor in Ontario, look no further:

Independent Contractor Agreement (Client) – No Schedules

written by admin \\ tags: dispute, independent contractor, independent contractor agreement, independent contractor template, negotiate, payment

Feb 13

Consulting Agreements | Independent Contractor Agreements… (Part 2)

Business Law 1 Comment »

As a follow up to my last blog, in this blog, I’ll be discussing some of the basic terms you may find in a standard independent contractor agreement.

Introductory Clause
Here, you’ll need to properly identify the parties (e.g. individuals, corporations, etc.) and date the agreement. The parties will be the “Client” (the party receiving and paying for the services) and the “Independent” “Contractor” (the party performing and being paid for the services). Identify the parties with utmost precision because if there are any mistakes here, you’ll be in a rough spot in case of a dispute. For example, the real person you may want to go after is in actuality not the person who signed the agreement!

Background
This part of the agreement includes information about the context and purpose of the agreement. It leads up to the actual body of the agreement. It’s important to identify here what business the Client is in and what services the Contractor will perform. These will ultimately become defined words – namely, the “Business” and the “Services” ¬– and used throughout the rest of the agreement. The Client will want to define its Business broadly to protect its interests (for example: by including a clause in the Agreement that ultimately prevents the Contractor from competing in the Business). Meanwhile, to limit its restrictions and liabilities, the Independent Contractor will want a narrow definition of the Business. There will definitely be some negotiating here! These things being said, the Services are typically described in a complete and accurate manner and can include both general and specific services. For example, this definition could say: “The Contractor offers professional graphic design services including, but not limited to, website layout design, logo design, photography, etc. (the “Services”)”.

Services
The main body of the agreement starts off with the Client agreeing to engage the Independent Contractor to perform the Services from time to time. Using the words “from time to time” means that the engagement just won’t happen when the agreement becomes effective (but could happen at any time during the Term of the Agreement). The Client will typically want those Services to be performed at certain standards ¬– for example, by a qualified, competent, and prudent worker engaged in the Business or according to the Client’s own internal rules, policies, and procedures. See how the defined term “Business” comes up here?

Without specifying these minimal standards, the Client may have a difficult time complaining about how the Services were performed later on. Sure, there may be negligence claims which can be raised above and beyond the agreement itself, but adding in provisions such as this can be IN ADDITION to negligence claims and can be more specific or comprehensive. This way, you’re not leaving it up to a judge to try to figure out how the Services were contemplated to be performed by the parties at the time they entered into the agreement.

In the next blog, I’ll finish up this discussion of independent contractor agreement terms…

In case you’re a Client and looking to engage the services of an Independent Contractor in Ontario, look no further:

Independent Contractor Agreement (Client) – No Schedules

written by admin \\ tags: consulting agreement, fight, independent contractor agreement, independent contractor agreement template, negotiate, resolve dispute

Feb 13

Consulting Agreements | Independent Contractor Agreements… (Part 1)

Business Law 1 Comment »

In this blog, I’ll be discussing: who are independent contractors and when are independent contractor agreements used?

Who is an Independent Contractor?
An independent contractor is a person who carries on business as a separate business entity. That business entity could be an individual, a sole proprietorship, a corporation, a partnership, a franchise, joint venture, etc. It doesn’t really matter what legal structure the independent contractor takes. What matters is the relationship between the independent contractor and his, her, or its client (i.e. the person paying the independent contractor for products or services).

Unlike an employee, an independent contractor performs the work if it wants to, how it wants to, when it wants to (you get the point). That said, the independent contractor may agree to provide the services in accordance with the client’s rules, policies, procedures, etc. or in consultation with the client or another person. There may also be other minimal standards imposed on how the services are to be performed. An independent contractor generally has multiple clients and its relationship with those clients is (or at least should be) governed by a written agreement. The independent contractor may itself hire other independent contractors or employees to perform the work (unless the agreement says otherwise). Another big difference between an independent contractor and an employee is the lack of legislative protection the former has: no minimum wage, maximum hours, or minimum notice or severance requirements upon termination. Indeed, an independent contractor is generally disengaged or terminated pursuant to the terms of the agreement.

When are Independent Contractor Agreements used?
Independent Contractor Agreements are used when the parties want to remain separate and specifically want to avoid creating an employment (or other) type of relationship. There are various reasons for this. For example, the independent contractor may want to remain independent because they:

Run their own business.
Have multiple clients.
Decide when and how to do work.
Want to deduct business expenses from their taxable income.
Own their own tools and equipment.
• Want to be able to make more money.

For its part, the client will be able to avoid the hassle of withholding and remitting income taxes, employment insurance premiums, and Canada Pension Plan contributions on behalf of the independent contractor. These things should be reflected in the independent contractor agreement (as will liability in case the opposite holds true).

If the Independent Contractor is in reality an employee in Ontario, then the employer is required (among other things) to withhold and remit income tax payable by the employee, Employment Insurance premiums on the employee’s insurable earnings, and Canada Pension Plan contributions in respect of the employee’s pensionable employment earnings. The employer would also need to comply with the termination (minimum notice periods or pay in lieu of notice) and severance provisions in the Ontario Employment Standards Act. Finally, the employee will only be able to make certain limited deductions against their taxable income (e.g. travel, home office, etc.).

Overall, IT IS VERY IMPORTANT that the client and the independent contractor STRUCTURE THE REALITIES of their relationship to be that of client and independent contractor and NOT employer and employee. Simply making the contract look more like an independent contractor agreement instead of an employment agreement won’t do it. If there is ever a dispute about the nature of the relationship, tribunals, courts, and other triers of fact will look at the realities of the relationship – not just what’s written on paper.

In case you’re a Client and looking to engage the services of an Independent Contractor in Ontario, look no further:

Independent Contractor Agreement (Client) – No Schedules

written by admin \\ tags: consulting agreement, consulting agreement template, independent contractor, independent contractor agreement template, independent contractor agreements

Feb 05

The Art of Legal Drafting (Lesson #1)…

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As part of the Legal Forms project which we are releasing this month, I took it upon myself to become the best legal drafted I could be. I read all the books I could get my hands on and surfed the internet for tips and tricks on how to draft in your language: Human!

So I decided to share some of the wealth of knowledge about the topic of legal drafting with you. Lucky you!

So here is lesson #1: the introductory clause.

Agreements typically start off with an introductory clause. This is what tells you what the agreement is, when it is being entered into, and who the parties are. I’ve seen some pretty different variations of this. The key here is that, so long as it’s clear and certain and answers those few basic issues, you have some flexibility over how to present the information. Here are some tips and tricks:

Give the agreement a relevant title.
You don’t need to identify the parties to the fullest extent possible. So if a corporation is a party, you can put their address in the notice section in the General Terms (at the end) instead of here. Putting it in the introductory clause clutters things up.
Don’t identify or try to explain what the relationship of the parties is. Leave that for the Background.
I’m not a big fan (unless you have a lot of parties) of separating each party and writing “On the First Part”, “On the Second Part”, etc. Not sure where this custom came from, but it’s seemingly not necessary.
You can use defined terms to identify the parties in a short form way to be used throughout the rest of the agreement. I like to make this stand out by putting the defined party term in bold and underline (e.g. the “Party“).
I like to use the following example as an introductory clause: “This X Agreement is dated X and is between X and X”. Notice how I didn’t say the agreement was executed on this date? That’s because there’s a possibility that it is executed on a different date than the date it was signed. Execution basically means signed and delivered. But delivery may not be done on the same day. You get the point. To simplify: just say when the agreement is dated. It’s clearer than using the word “made” or “entered into”. What about the use of the word “between”? Why not “by and between”? Well, it’s simple: is too wordy. You could also use the word “among”.
Try not to clutter the introductory clause with extra information that isn’t necessary (e.g. what the parties intentions are, etc.).

Keep it clean. Keep it simple.

written by admin

Feb 04

Where’s the legal authority? Look at the context!

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you. I should know – I’m one of them and you can contact me directly.

The law does not operate in a vacuum. There is a context. Take the following example. A real estate agent is investigated by the governing body, the Real Estate Council of Ontario. Now the investigator can’t just do or say whatever they feel like. There are limits on their ability to investigate. There are also limits on how the Discipline and Appeals Tribunal deals with maters. Those limits can be found in the Real Estate Business and Brokers Act, 2002, the Statutory Powers Procedure Act, and the Discipline and Appeals Committees Rules of Practice. Limits can also be found in judge-made law (called the common law). Part of a lawyer’s job is to review all of the governing legislation to see that they’ve been complied with. Failure to comply may result in a remedy.

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Feb 04

Online Legal Forms – Are They Valid and Enforceable?

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So when I tell people about the upcoming online legal forms project, a lot of people naturally respond: “Are they valid and enforceable?” The answer to that question, as always, is going to be: “It Depends”. Think of it like this. You download a template. It is incomplete. You read it over and finish it. Then you and another party sign it and deliver it to each other. So, is it a valid and enforceable contract? Believe it or not, this simple situation still results in the answer: “It Depends”. It depends on how the contract was entered into. For example, if the contract was entered into under duress, by undue influence, through a misrepresentation (negligent, fraudulent, innocent, etc.), or it was an unconscionable contract, then a party may claim that it is invalid and they might be entitled to undo the contract! So, if procedurally, it was entered into properly, can the substance of the legal form make it unenforceable? Sure! If there’s something missing which typically makes a contract enforceable – such as an exchange (called “consideration”), clear and certain terms, an offer and acceptance, etc. – then the contract may be challenged as not being valid and enforceable. So what does this have to do with online legal forms? Well, not much. you see, you could go to a book store or a library and see books with legal forms and use those legal forms. You could also ask a friend or relative for a sample of a legal form they’ve used in the past. It makes no difference. Legal forms are simply templates. But the way in which the contract is entered into and the actual substance of the contract is what matters. The substance will depend on the drafter, their skills, knowledge, and experiences. The best legal forms are simple to understand, cover the basics, devoid of legalese, etc. Each legal form we plan on offering has been drafted, reviewed, and revised over the course of a number of days to make sure that it covers the basics, that it is easy to understand and customize, etc. So the answer is: as with any agreement that you can acquire, there’s always a chance it can challenged. Even legal agreements drafted by lawyers are not necessarily bullet-proof. Having a good lawyer, however, can help mitigate or eliminate the ability of other parties to challenge a contract.

written by admin \\ tags: customize, legal forms, online legal forms, reviewed, valid and enforceable

Jan 28

Toronto Partnership Lawyer: Limited Partnerships (Part 9) – Ending the Limited Partnership

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Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to drafting, reviewing, interpreting or resolving disputes concerning partnership and limited partnership agreements, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you with your partnership and limited partnership agreements. I should know – I’m one of them and you can contact me directly.

In this blog, I’ll be discussing some of the things you should think about concerning terminating the limited partnership.

Recall that the limited partnership is governed by the Limited Partnerships Act and the terms and conditions of a limited partnership agreement. So those are two sources that could govern the intended or unintended termination of a limited partnership.

Cancellation vis-a-vis Limited Partnership Agreement
Sometimes, the limited partnership agreement that governs the conduct of the parties to a limited partnership will deal with the issue of termination. For example, termination may arise as of a certain date, after a certain time (e.g. 5 years), on the occurrence of a certain event or situation arising, or upon agreement in writing (for example) by all of the parties. There may be notice requirements that must be followed with respect to the latter. There may also be issues as to how many (e.g. majority, unanimity) of the partners – be they limited or general – are capable of requesting termination of the limited partnership. A limited partnership agreement may also discuss those not so great situations where the limited partnership is terminated for ’cause’ (i.e. because of an act or omission of one of the partners).

Cancellation vis-a-vis General Partner
First, under this Act, a limited partnership is dissolved on the following events happening to the general partner:

death of a general partner
mental incompetence of a general partner
dissolution of a corporate general partner

These things being said, any remaining general partner can continue the business of the limited partnership IF it has right to do so in a partnership agreement and the consent of all remaining partners is obtained. So what if all the partners in the limited partnership agreed that a majority of the remaining partners – not unanimous consent – was required? What if they agreed to that unanimously in a limited partnership agreement? That’s an interesting point. Just to clarify: the idea is that any percentage less than ALL of the remaining partners can consent to a remaining general partner from continuing on as the general partner. Can this be done? Some might say: couldn’t those remaining partners simply consent that not everyone’s consent is required in these circumstances? Perhaps majority consent? Recall that limited partnerships are also governed by the Partnerships Act, which says that the default clauses of that Act can be varied by the consent of all the partners: s. 20. But the problem with that is that the Partnerships Act only applies insofar as it does not conflict with the Limited Partnerships Act: s. 46. Since the Limited Partnerships Act doesn’t allow for partnership agreements to vary the requirement that ALL remaining partners consent (as discussed above), you’d be violating this statute by doing otherwise.

Interesting (or mind-bogglingly confusing) stuff, eh?

So how could a general partner be dissolved if it’s a corporation? Well, it could be dissolved for failure to comply with corporate or tax laws. It could also be dissolved by court order under the relevant statute. It could be wound up as part of an agreement by the shareholders (e.g. pursuant to the terms of a shareholders’ agreement).

Cancellation vis-a-vis Limited Partner
Limited partners can try to dissolve the limited partnership through a court order: s. 10(c). That said, this right should be looked at in light of the limited partnership agreement, which may create contractual rights between the parties concerning the dissolution of the limited partnership by applying for a court order.

A limited partner also has the right to have the limited partnership dissolved and its affairs wound up where the limited partner is entitled to the return of its contribution but, upon demand, that contribution is not returned to the limited partner. Note: I’m curious as to what form the demand must take and how long it must go unreturned for this provision to be applicable. Just some side-thoughts…. Furthermore, a limited partner can have the limited partnership dissolved if the OTHER liabilities of the limited partnership have not been paid (i.e. not liability to the limited or general partners) or the limited partnership assets are insufficient for their payment and the limited partner seeking dissolution would otherwise be entitled to the return of their contribution. I know that’s a mouthful, but you get the idea: (1) OTHER liabilities have not been paid and limited partner wanting dissolution would otherwise be entitled to the return of their contribution or (2) limited partnership assets are NOT ENOUGH to pay OTHER liabilities and the limited partner wanting dissolution would otherwise be entitled to the return of their contribution.

Filing Declaration of Dissolution
In these three examples (i.e. termination pursuant to agreement, or dissolution because of something to do with the general or limited partner), the limited partnership must file a DECLARATION OF DISSOLUTION with the registrar under the Business Names Act. This declaration must be filed when the limited partnership is dissolved or when all of the limited partners cease to be limited partners: s. 23 of the Limited Partnerships Act. Furthermore, the declaration of dissolution must be signed by at least one of the general partners. When it’s filed, the declaration of the limited partnership is canceled: s. 23(3).

Cancellation vis-a-vis Registrar
Under s. 23.2 of the Limited Partnerships Act, the Registrar under the Business Names Act can cancel a limited partnership declaration – thereby eliminating the limited liability enjoyed by the limited partners as of that point – for failure to pay the required fee. This can only be done, however, if the Registrar gives the limited partnership 21 days notice of the intention to cancel.

At the end of the day, there’s a lot of guidance you’re going to need (going through the partnership agreement, the legislation, and shareholder agreement for the general partner, etc.) if you’re thinking about dissolving or terminating the limited partnership. Your best bet is to get professional help: make a post on Dynamic Lawyers.

written by admin \\ tags: limited partnership, limited partnerships act, ontario limited partnership, partnership, toronto, toronto business lawyers limited partnerships, toronto limited partners, toronto limited partnership lawyers

Jan 21

Confidentiality Agreements – What to remember…

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Please keep in mind that this is not legal advice. The information provided herein is for educational purposes only. If you believe you require assistance in reviewing, drafting, negotiating, etc. a Confidentiality and Non-Disclosure Agreement, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers). You can contact me directly as well.

As a follow up to one of my first blogs ever on Confidentiality Agreements, I thought I should add a few thoughts seeing as how I’m currently drafting a Confidentiality and Non-Disclosure Agreement as part of Dynamic Lawyers’s new legal forms project.

First, there’s basically two kinds of confidentiality agreements: one-sided and mutual. The one-sided confidentiality agreements are basically in favour of the discloser and at the expense of the recipient. This type of agreement makes sense in certain situations (e.g. the discloser is providing the recipient with proprietary information that is not in the public realm). But there are also mutual types. These allow for both parties to share and be equally responsible for the use and protection of the confidential information they provide each other. This type of agreement is used when parties are examining each other for the purpose of doing a transaction, merging, or engaging in a joint venture (for example).

Moving on, there’s a whole bunch of things that typically go into a confidentiality agreement, namely:

Background information
Definition of confidential information
Definition of what is NOT confidential information
Term
Termination
Who owns the confidential information
Obligations of recipient of confidential information
Compelled disclosure
What happens in case the confidential information is lost or inappropriately disclosed
Return or destruction of confidential information
Remedies (e.g. injunctive relief)
General terms (there are a lot of them, which I won’t get into here)
Etc.

You may think that entering into a confidentiality and non disclosure agreement is a simple matter, but there are many issues that you need to be aware of. For example, do you want to put stringent timelines on the requirement for the recipient to return or destroy confidential information, or should they be held to a “prompt” or “in due course” standard. Language is everything here!

Be sure to have a lawyer draft or review your confidentiality agreement as it may contain things you didn’t expect like: non-compete or non-solicitation clauses!

In case you’re looking for an Ontario Mutual or One-Sided Confidentiality Agreement, then look no further:

Confidentiality and Non-Disclosure Agreement (Mutual)

This Agreement can be used to restrict both parties’ use and disclosure of confidential information that is being provided to it. If only ONE party is sharing confidential information and want to restrict the other’s use and disclosure of that information, then you can purchase a ONE-SIDED Confidentiality and Non-Disclosure Agreement: