When two parties are involved in selling or purchasing a business, the first obstacle is the issue of protecting the confidential information to be exchanged between both sides during the process. To start the project off on the right foot, it is important to set out the procedure it in a way that fosters the necessary confidence and efficiency. Whereas, in this type of transactions it is usually the potential seller that discloses most of the confidential information, it may be a good idea to provide for reciprocal confidentiality obligations so as to give equal protection to both parties.

This template establishes the legal framework for the exchange of information and the bilateral undertakings relating thereto. Note that our confidentiality undertaking letters (templates Y01300 and Y01350) provide unilateral undertakings that only protect the seller.

We recommend using this template when a contemplated transaction involves exchanging confidential information. For example, when a seller transfers its business in exchange for shares in the purchasing corporation, the seller must assess the financial health of the purchaser before accepting this form of payment.

In the absence of a written agreement, there is a risk that unprotected information will become available in the public domain, which may compromise either party's subsequent attempts to claim a proprietary right in the information disclosed and any revenue generated thereby.

If there is only one party who will be disclosing information of a confidential nature, we recommend instead using our confidentiality letter - see templates Y01300 or Y01350.

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Agents
0.01.03 Agreement
0.01.04 Breach
0.01.05 Confidential Information
0.01.06 Disclosing PARTY
0.01.07 Force Majeure
0.01.08 Intellectual Property
0.01.09 Law
0.01.10 Legal Representatives
0.01.11 PARTY
0.01.12 Person
0.01.13 Receiving PARTY
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-Compliance
a) Severability
b) Substitute Provision
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Dates and Time
a) Time of the Essence
b) Computation of Time
c) Delays
0.04.03 Financial References
0.04.04 Cross-References
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
1.00 PURPOSE
1.01 Primary
1.02 Ancillary
2.00 CONSIDERATION
3.00 TERMS OF PAYMENT
4.00 SECURITY
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
5.04 Canadian Resident
5.05 Canadian Status
5.06 Commission
5.07 Insurance
5.08 Nominee
5.09 Disclosure
5.10 Legal Proceedings
5.11 Exclusivity
5.12 Project Schedule
6.00 REPRESENTATIONS AND WARRANTIES OF VENDOR
7.00 REPRESENTATIONS AND WARRANTIES OF PURCHASER
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Exclusivity
8.02 Procedure and Project Schedule
8.03 Impediment
8.04 Confidential Information
8.04.01 Acknowledgement
8.04.02 Undertaking
8.04.03 Exclusive Ownership
8.04.04 Prohibition
8.04.05 Conditions for Disclosure
8.04.06 Protection
8.04.07 Identification
8.04.08 Copying or Reproducing
8.04.09 Non-Disclosure
a) Obligation
b) Exception
8.04.10 Restriction of Use
8.04.11 End of Evaluation
8.04.12 Disclosure Required by Law
9.00 DUTIES AND OBLIGATIONS OF VENDOR
10.00 DUTIES AND OBLIGATIONS OF PURCHASER
11.00 SPECIAL PROVISIONS
11.01 Liability
11.02 Force Majeure
11.02.01 No Default
11.02.02 Duty
11.02.03 Rights of Other PARTY
11.03 Further Assurances
11.04 Other Remedies
11.04.01 Election
11.04.02 No Limitations
11.05 Prescriptive Period
11.06 Pre-Incorporation Agreement
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
a) Notice
b) Reply
c) Appointment of a Third Arbitrator
d) Confidentiality
e) Hearing
f) Ruling
g) Costs
h) Supplementary Rules
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 No Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 TERMINATION
13.01 Unilateral Termination
14.00 EFFECTIVE DATE
15.00 DURATION
15.01 Indefinite Duration
15.02 Extended
16.00 SCOPE


SCHEDULE A – EXCERPT OF A RESOLUTION OF VENDOR
SCHEDULE B – EXCERPT OF A RESOLUTION OF PURCHASER
SCHEDULE 5.12 – PROJECT SCHEDULE