“Listen – Do you want to know a secret? Do you promise not to tell, whoa oh, oh – Closer – Let me whisper in your ear” John Lennon & Paul McCartney
A general Nondisclosure Agreement (NDA) is, just that, a general document crafted to protect you in most situations. This general document can be used for employment, hiring a contractor, evaluating a product, or other transaction where a detailed, narrowly crafted document may not be necessary. This document should be used when no nonpublic information is being released. Keep in mind that these documents can be one way or mutual, depending on your need.
I have included a standard form of NDA with this post. This document is unilateral, but can be modified to a mutual NDA with a little tweaking. Mutual NDAs should only be provided when both parties are releasing information.
This example has the general provisions typically included in an NDA. Keep in mind, though, that it is always important to tailor a general form of agreement, in order to make it more specific and effective in addressing your particular situation. You want to make small modifications to this form so that it addresses the purpose or context of your situation and so the limitations placed on the recipient are appropriate and not overreaching.
- Definition of Confidential Information – You need to define what must be kept confidential – you can make that definition broad or narrow, depending on the needs of the transaction.
- Definition of Information excluded from coverage – just as you must define what is confidential, you must define what is not, or information that may be considered confidential, but for one reason or another ceases to be confidential. For example, information has become public or is public, or information that was already known to the recipient.
- Definition of Permitted Use – finally, you should define what the recipient can and cannot do with the information.
- Duty of Confidentiality – You must state that confidential information shall be used solely for a Permitted Use. Seems intuitive, but a key provision nonetheless.
- Term – the duty of confidentiality must be limited in time so as to be reasonable. Depending on the use, the timeframe varies.
- A requirement to hold the information confidential. Again, seems intuitive, but a key provision nonetheless.
- Damages – you need to define what happens when bad thing happens.
As you consider modifications to this form of agreement, keep in mind the following points:
- By narrowly crafting the purpose for the delivery of the information, you are subtly amplifying the power of the restrictions. Any use outside the stated purpose triggers a breach by the recipient.
- By narrowly crafting the restriction in time and in geographical reach, if applicable, you are increasing the likelihood that a court will enforce the agreement. Courts as a rule disfavor NDAs and their cousins the Non-competes and non-circumvents, particularly in the employment context. Restraints such as these should be narrowly crafted in time and location in order to increase the likelihood of the enforcement. For time, no more than eighteen months. When geographic limitation is appropriate, the limitation should likewise be crafted to protect your business, but not so broad as to prevent the recipient from earning a living.
Practice Point: The key take-away for an effective NDA is to look reasonable in your request. The crazier you look, the more likely that the NDA can be challenged and will not be enforced by a court.
To download a copy of a general NDA and confidentiality agreement, please fill out the form below.
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