Non Disclosure Agreements Explained

by Geoff Bright · September 21, 2012

In a recent article I explained what a JV contract should include. In this one, I will look at another type of contract you might want to use – a non disclosure agreement.

A non disclosure agreement (or NDA) is also sometimes known as a confidentiality agreement. Basically, an NDA is a promise made by one party to the other not to tell anyone else what the other party tells them when negotiating or working together in a JV deal. Confidentiality and non disclosure agreements should be signed right at the beginning of discussions between prospective JV partners. The effect of them is to restrict who has access to certain information, limit what can be done with that information and require the return of any documents exchanged. But really, you can include anything you like in them!

Of course, you’ll hope that your prospective partner is trustworthy anyway, but having a non disclosure agreement in place can be useful reassurance.

Here’s an example of what a non disclosure agreement should cover. Again, this isn’t legal advice as I’m not a lawyer (I’m glad to say!) but it will give you an idea of what you need to include:

NON DISCLOSURE AGREEMENT

This agreement is made this _____ day of _____________ ___ between :

(ABC Ltd) of [Insert address] and:

(XYZ Ltd) of [Insert address].
This agreement shall govern the conditions of disclosure by (XYZ Ltd) to (ABC Ltd) of certain confidential information including but not limited to documents, drawings, data, trade secrets and intellectual property relating to (Product name) developed by (XYZ Ltd).

With regard to this confidential information (ABC Ltd) hereby agrees:

1. Not to use this information for any purpose other than evaluating its interest in
entering a business relationship with (XYZ Ltd).

2. Not to disclose the information to others, without the permission of (XYZ Ltd) given in writing, except that:
– which is legally obtained by (ABC Ltd) from sources independent of (XYZ Ltd).
– where (ABC Ltd) can demonstrate that the information was previously known;
– which is now, or becomes in the future, public domain information other than through the acts or omissions of (ABC Ltd);

3. To secure and guard the information so as to prevent its disclosure to the best of its ability.

4. That (ABC Ltd) shall not directly or indirectly acquire any interest in, or design, create, manufacture, sell or otherwise deal with any item or product, containing, based upon or extracted from the information, except as may be expressly agreed to in writing by (XYZ Ltd).

5. (XYZ Ltd) will be entitled to obtain an injunction to prevent any breach of this agreement but failure to enforce this agreement will not be deemed a waiver of this agreement.

6. The obligations of (ABC Ltd) with regard to this agreement shall continue for a period ending five years from the date stated above.

Signed for (ABC Ltd):
Date:

Signed for (XYZ Ltd):
Date :

Comments or questions? If so, please post them to the discussion forum