Certain provisions in non-disclosure agreements (NDAs) do not always receive the attention or scrutiny they deserve, since they initially appear to be standard or straightforward provisions and clauses. However, failing to tailor the parties, governing law, and venue provisions to address the circumstances giving rise to the agreement can have unintended consequences and should be addressed when negotiating non-disclosure agreements.
Parties to the Agreement
Typical NDAs are one-way agreements. There is a disclosing party and a recipient party, and it’s generally easy to identify both of them at the beginning of an NDA. However, before moving on to the rest of the agreement, consider whether there are other people or companies who could reasonably be considered parties to the NDA.
If the recipient party is a subsidiary of a larger organization and may have a business need to share information with the parent company or a related business, the NDA should identify those entities by name as well. Similarly, if there is an understanding that either party may need to rely on an agent, business partner, or another third party in performing its obligations under the NDA, such third parties should also be named.
Governing Law and Venue
The choice of law and venue provisions in an NDA establish which jurisdiction’s laws will govern any disputes that may arise under the agreement, and where such disputes will be adjudicated.
When choosing a jurisdiction for governing law, consider that the laws chosen will govern disputes about enforcement of the contract and about the interpretation of contract provisions. The venue chosen controls where legal action will occur, if it becomes necessary.
The disclosing party, typically the business requiring that the NDA be signed, usually identifies its state or jurisdiction’s law as the governing law and its local court framework as the venue for the agreement. Generally, choice of law and venue use the same jurisdiction. However, they can be different if there is a valid business reason for doing so, and if the parties agree to such terms.
Baer Reed can provide services for reviewing and negotiating non-disclosure agreements . To learn more about our NDA services contact us today.
- On August 13, 2019
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