A Non-Disclosure Agreement or NDA is a contractual agreement between the Discloser (the party sharing the information) and the Receiver (the party receiving the information) to share information for a specific purpose with a promise not to disclose or use the information outside of the bounds of what is permitted under the agreement.
Here are 12 things to consider when drafting NDAs:
1. Writing – A non-disclosure agreement (NDA) is a contract and it should be in writing and signed by all of the parties involved.
2. Party Names –Make sure the correct and proper, legal names of the parties are used in the NDA.
3. Proprietary Information Clearly Identified – Ensure all the information that the parties have deemed proprietary or confidential are clearly identified in the NDA and properly marked as confidential on the documents themselves.
4. Limitations of Use and Purpose – The NDA should answer the questions, who may have access to the information? The NDA should describe what the information is, what it can be used for and for what purpose or purpose(s). For an example, the information is disclosed for the sole purpose of an evaluation. Therefore, the receiver may only use the information for that purpose and may only disclose the information to those that will need it to accomplish the evaluation. The NDA should also impose liability on the parties bound by the agreement for breach by their representatives or others they disclose the information to.
5. Excluded Information – If there is any information that is specifically excluded from the NDA it should be precisely and narrowly defined. Types of information that may be excluded include, information that is available to the public, information already available to the Recipient, and/or information obtained by the Recipient from a third party who is not a bound by the NDA.
6. Duration – Time period, which disclosures are to be made and the period of time that the information will be maintained by the parties.
7. Define – Definitions section that defines the confidential information.
8. Title to and Return of Information – If the Discloser does not intend to give a license to the Receiver, then the Discloser will want to state something to that effect.
9. Requirements for Safeguarding Information – The Disclosing Party will want to ensure its confidential information is protected from misuse, unintended disclosure or release; therefore, the Discloser will want to be sure to include a provision about how the information is to be protected. If the Receiver has a policy in place, the Discloser should exercise due diligence and look at the policy and determine whether the policy is actively used by the Receiver and whether or not it is acceptable to the Discloser. If it is not or the Receiver does not have a policy in place the Discloser will want to be certain that sufficient safeguards are placed in the NDA and the Receiver is able to accommodate your requirements.
10. Confidential Information after Agreement Ends – The NDA should specifically state what happens to the information once the agreement ends. Is the information returned to the Discloser? Will the information be destroyed? Can copies of the information be maintained by the Receiver? If yes, how long can the information be maintained?
11. Remedies for Breach – What types of remedies will be available if the NDA is breached by the Receiver? Remedies may include: an injunction to restrain an anticipated breach and/or specific performance of a provision in the NDA.
12. Enforceability – A contract is only good if you are able to enforce it; therefore, in order to support your position in the event of a dispute you need to have evidence of the confidential information that is discussed that is covered under the agreement. You will need to keep a record of the information by documenting it in meeting minutes and making sure the documents are properly marked as confidential.
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