April 7th - 2004

Form helps maintain confidentiality

Commercial members often handle confidential information when pursuing properties for their clients.

Commercial members often handle confidential information when pursuing properties for their clients. OREA’s Confidentiality Agreement (Form 560) has been created specifically to help members when providing confidential or proprietary information to others involved in a potential transaction.

The agreement allows a recipient to disclose confidential information to an unauthorized third party providing the recipient enters into a confidentiality agreement with that third party after getting the provider’s written authority to do so.

The recipient is agreeing not to request information from anyone other than the provider without prior written consent. This is intended to eliminate direct inquires of employees or other parties who may not be aware that a business is being sold or a premises is being leased.

The provider of the information can be a seller, buyer, landlord, tenant or broker. The recipient can be a seller, buyer, landlord, tenant, broker, advisor or other party who has a legitimate need for the information.

For the purposes of the agreement, “provider” also includes any employees and principals of the provider. “Recipient” includes its employees, agents, advisors, consultants and lenders of the recipient’s principal.

Confidential information includes any written, electronic and verbal information designated in the agreement as confidential or proprietary. Understandably, there is certain information about any business that must remain confidential in order to preserve its competitive advantage in the marketplace.

For example, the seller of a business would provide financial statements to the listing broker on the understanding that a Confidentiality Agreement would be signed between the listing broker and the buyer before the buyer received the statements.

Potential buyers or tenants have a legitimate need to assess confidential information as part of their due diligence in determining whether to enter into a transaction. However, indiscriminate disclosure of that information to unauthorized parties could be detrimental to the provider.

The agreement places certain obligations on the recipient. Confidential information must be returned and any copies destroyed if negotiations come to an end. Any investigations are at the recipient’s sole risk and expense without any liability on the provider.

The provider is not liable for the accuracy and completeness of the information and any non-compliance or dispute arising out of the agreement shall be subject to and governed by provincial law.

The OREA Confidentiality Agreement was not created to address federal privacy legislation. Confidentiality agreements had been in use long before the Privacy Act came into existence and this form will assist commercial members and their clients in the pursuit of selling and leasing properties and businesses.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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