A Confidentiality Agreement (also called a Nondisclosure Agreement or "NDA") is a vital level of protection if you must reveal business data, records, trade secrets or other information to any other party for any reason. Your confidential information is a proprietary asset tp which it may be impossible to assign a value. The disclosure of that information could have wide ranging consequences.
Some NDAs are mutual, depending upon the nature of the relationship between the parties. For instance, in the case of a strategic alliance, each of the parties will disclose confidential information and each party will be bound by the nondisclosure provisions of the agreement.
It is always advisable to have employees sign a confidentiality agreement at the time they begin their period of employment. Most employee confidentiality agreements also include non-solicitation and non-competition provisions, as a further level of protection for the employer.