ChecklistsNon-Disclosure Agreements

If you are getting ready to execute a confidentiality agreement (“CDA,” “NDA,” or nondisclosure agreement), several important issues require your attention.  If you are a small company preparing to execute a “big company” agreement, you may little ability to alter the agreement, so you simply need to under the terms and make a business decision about the execution of the document. Whatever the case, consider these questions:

 

  • When did the confidentiality provision become effective (in other words, when did you start sharing secrets)?
  • Identify the proper parties (Corporate Name of Seller; Corporate Name of Buyer). Are their subsidiaries or other parties (such as accountants, attorneys and investment bankers) involved that need to be bound by the agreement?
  • Is the agreement unilateral (binding one party) or bilateral (binding both the disclosing and the receiving party)?
  • Draft a specific purpose of the disclosure of information. This may also be referred to as the permitted use of the disclosed information.
  • Define confidential information (written and oral or only oral; only information written down and marked “confidential, etc.).
  • Are the actual conversations confidential as well (in addition to the information disclosed)?
  • Is there a restriction on disclosure to others, such as employees who are working on the project, consultants who “need to know,” etc.?
  • Identify exceptions (with note caveats) to the confidentiality requirements:
    • As required by law (is prior notice required)
    • Information publicly available (and disclosed without violation of a confidentiality agreement)
    • Already in possession of recipient (and can be documented)
    • Independently developed by recipient (and can be document)
  • Determine the term of confidentiality agreement.
  • Consider intellectual property protections (no right to reverse-engineer, no grant of a license).
  • Effect of termination (return information, certify that the information was destroyed).
  • Enforcement of Agreement (injunctive relief, posting of a bond).
  • What is the liability for a disclosure? Is it limited?
  • Is there an export control paragraph? Is it needed?
  • Is this the entire agreement of the parties regarding confidentiality? (or is there a reference somewhere else)?
  • Include a notification clause with identified contacts and contact information.
  • Identify which clauses survive termination of the agreement.
  • Identify the governing law and venue of any action regarding the agreement.
  • Confirm that no partnership, joint venture or other relationship is created by the agreement.
  • Insert a severability clause (so that the entire agreement is not struck down if there is a problem with one clause).
  • Consider these additional business terms –
    • Non-circumvention.
    • Non-solicitation.
  • Determine signature block (who are the proper parties to execute the document).

 


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