Critical Clauses When Reviewing Confidentiality Agreements (NDAs)
Confidentiality agreements, also known as non-disclosure agreements (NDAs), should be tailored to address the parties’ specific needs and circumstances. If a confidentiality agreement does not include certain critical provisions, it may be ineffective. When reviewing a confidentiality agreement, attorneys should look for the following key elements:
- Identification of the parties. An NDA should clearly identify who is subject to the agreement’s confidentiality provisions. If there is an anticipated need for the recipient to share information with others inside his or her organization, the agreement should extend to those individuals.
- Whether the agreement is “mutual” or “one-way.” NDAs may be “mutual”, where both parties intend to share information with each other. Alternatively, an agreement may only be needed to protect the flow of information from one party to the other, in which case it’s a “one-way” contract. The agreement should make this distinction.
- A clear, specific definition of what “confidential” means. The definition of what information is to be protected is critical. If the intention is to protect both written and oral information, including information in letters, emails, and conversations, the agreement should specify that such types of communications are protected. If this definition is ambiguous, it may be difficult to enforce the agreement.
- How the recipient may use confidential information. What are the permissible uses for confidential information? The agreement should specifically document why the disclosing party is entering into the agreement to share confidential information with the receiving party.
- Duration of the agreement. An NDA should include specific language regarding how long the terms of the agreement are to be honored by the parties. Courts may not enforce unreasonable restrictions. What “reasonable” means will vary from case to case, however.
- Remedies for breach of agreement. Confidentiality agreements should also specify what the disclosing party’s possible remedies are if the receiving party breaches the agreement, including the disclosing party’s right to seek equitable remedies and the jurisdiction governing disputes.
Baer Reed provides an array of services to law firms, including NDA review. To learn more about how our legal professionals can help expedite your review of confidentiality agreements, contact us today.
- On November 28, 2018
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