A non-disclosure agreement (NDA) is a legal contract between two or more parties, designed to protect confidential and proprietary information from being disclosed to unauthorized parties.
NDAs are commonly used in business and commercial settings to safeguard trade secrets, customer information, intellectual property, and other sensitive information. In this article, we will discuss how to write an effective NDA, including important clauses to include and a sample NDA template.
1. Identify the Parties Involved
The first step in writing an NDA is to identify the parties involved in the agreement. This includes the disclosing party, which is the party that will be sharing confidential information, and the receiving party, which is the party that will be receiving the confidential information. It is important to clearly identify these parties and their roles in the agreement.
2. Define Confidential Information
The next step in writing an NDA is to define what constitutes confidential information. This can include any information that is not publicly available and is proprietary to the disclosing party.
Examples of confidential information can include trade secrets, financial information, customer lists, marketing plans, and any other information that the disclosing party wants to keep confidential.
3. Specify Exclusions
It is also important to specify any exclusions to what constitutes confidential information. For example, information that is already publicly available or that was independently developed by the receiving party should not be considered confidential. It is important to clearly outline these exclusions to avoid any confusion or misunderstandings.
4. Define the Purpose of the Agreement
The purpose of the NDA should be clearly defined in the agreement. This can include the specific project or business relationship that the NDA is intended to cover. It is important to be as specific as possible to avoid any ambiguity.
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5. Include Duration and Termination
The duration of the NDA should also be included in the agreement. This can be for a specific period of time, such as one year, or for the duration of the business relationship. It is important to specify when the NDA will terminate and what happens to the confidential information once the NDA has expired or been terminated.
6. Specify Obligations of the Receiving Party
The receiving party should have specific obligations outlined in the NDA. This can include restrictions on how the confidential information can be used, limitations on who can access the information, and requirements for safeguarding the information. It is important to clearly outline these obligations to ensure that the receiving party understands their responsibilities.
7. Include Remedies for Breach
Finally, the NDA should include remedies for breach of the agreement. This can include monetary damages, injunctive relief, or other legal remedies. It is important to specify what will happen in the event of a breach to ensure that both parties are aware of the potential consequences.
Sample NDA Template
Below is a sample NDA template that includes the important clauses outlined above:
NON-DISCLOSURE AGREEMENT
This Non-Disclosure Agreement (the “Agreement”) is made and entered into as of [DATE], by and between [DISCLOSING PARTY], a [STATE] corporation with its principal place of business at [ADDRESS] (“Disclosing Party”), and [RECEIVING PARTY], a [STATE] corporation with its principal place of business at [ADDRESS] (“Receiving Party”).
RECITALS
A. Disclosing Party possesses certain confidential and proprietary information (the “Confidential Information”).
B. Receiving Party desires to receive and use the Confidential Information only for the purpose of [SPECIFIC PURPOSE], subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows:
- Definition of Confidential Information. “Confidential Information” means any information or data, whethertangible or intangible, that is disclosed by Disclosing Party to Receiving Party, and that is designated in writing as confidential or proprietary, or that should be reasonably understood to be confidential or proprietary based on the nature of the information and the circumstances surrounding its disclosure.
- Exclusions. Confidential Information does not include information that: (a) is or becomes generally available to the public through no fault of Receiving Party; (b) was in Receiving Party’s possession before disclosure by Disclosing Party, as evidenced by Receiving Party’s written records; (c) is rightfully obtained by Receiving Party from a third party without any obligation of confidentiality; or (d) is independently developed by Receiving Party without reference to Disclosing Party’s Confidential Information.
- Purpose of Agreement. This Agreement is intended to protect the Confidential Information disclosed by Disclosing Party to Receiving Party for the purpose of [SPECIFIC PURPOSE].
- Duration and Termination. This Agreement shall remain in effect until [SPECIFIC DATE or EVENT]. Either party may terminate this Agreement at any time for any reason by providing written notice to the other party. Upon termination of this Agreement, Receiving Party shall promptly return or destroy all Confidential Information received from Disclosing Party, and shall provide written certification of such destruction upon request.
- Obligations of Receiving Party. Receiving Party agrees to: (a) use the Confidential Information only for the purpose set forth in this Agreement; (b) restrict access to the Confidential Information to those of its employees or contractors who have a need to know and who have been advised of the confidential nature of the information; (c) take reasonable measures to protect the Confidential Information from unauthorized disclosure, including implementing and maintaining appropriate physical, technical, and administrative safeguards; and (d) promptly notify Disclosing Party in writing of any unauthorized disclosure or use of the Confidential Information.
- Remedies for Breach. Receiving Party acknowledges that any unauthorized disclosure or use of the Confidential Information may cause irreparable harm to Disclosing Party for which monetary damages may be inadequate. Accordingly, in the event of a breach or threatened breach of this Agreement, Disclosing Party shall be entitled to seek injunctive relief, as well as any other legal remedies that may be available.
- Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of [STATE], without regard to its conflicts of law provisions.
- Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to such subject matter.
- Amendments and Waivers. This Agreement may be amended or modified only by a written instrument executed by both parties. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver of such provision or of the right to enforce it.
- Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
[DISCLOSING PARTY] By: ________________________________ Name: _______________________________ Title: ________________________________
[RECEIVING PARTY] By: ________________________________ Name: _______________________________ Title: ________________________________
Conclusion
Writing an effective non-disclosure agreement is crucial for protecting confidential information in business and commercial settings.
By following the steps outlined above and using the sample NDA template provided, you can create a comprehensive and legally binding NDA that protects your company’s trade secrets and proprietary information.
It is important to have all parties involved carefully review and sign the NDA to ensure that everyone understands their rights and obligations under the agreement. With a well-written NDA in place, you can feel confident that your company’s confidential information is protected and secure.