Many companies, particularly small businesses and closely held family-owned companies, develop commercial relationships with other companies over a course of repeated dealings that become more like commercial friendships. Like personal friendships, these commercial friendships have an unspoken level of trust where unguarded conversations become more frequent. While this more relaxed relationship is most likely helpful in the day-to-day dealings between the companies, it can result in unforeseen problems when there is a disclosure of confidential or propriety information without any formalized agreement about how the discloser and recipient are to handle the disclosed information. The issues of deciding when information is important and should be subject to some formal agreement and the nature or form of that formal agreement the discloser should request are not obvious.
As information becomes increasingly more important from a business or technology perspective, the level of protection selected should cover at least the minimum protection the discloser believes is necessary to preserve the perceived business advantage. However, this is the point when the parties’ commercial friendship can cause problems. The recipient knows nothing about the potential valuable information to be disclosed and, rightfully, may believe that the parties have a track record of mutual respect and trust so no agreement is necessary. The discloser also recognizes their past cooperation and does not want to jeopardize a good business relationship by insisting on a formal agreement. It is at this point that the discloser needs to recognize that the primary purpose in making the disclosure is to advance the company’s goals and making a disclosure without the necessary protection may ultimately do unforeseen damages to the company’s future prospects.
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