What is a Non-Disclosure Agreement (NDA)? 212 922 0005 John Kiritsis, Esq.
An NDA is basically an agreement where a recipient of proprietary and/or confidential information agrees not to disclose such information, for the benefit of the party that owns such proprietary and/or confidential information.
Broad Overview. 212 922 0005. Kiritsis Law GroupGenerally speaking, an NDA in order to protect the owner of the proprietary/confidentiality information would contain a lot of provision. Some of the main ones includes: i) No warranty ii) Risk of Disclosure, iii) Limited License, and iv) General Provisions. Let's go into more depth for each of the preceding 4 provision types:
[I} No Warranty: There is a possibility that the Confidential Information could contain mistakes or errors, or be based on assumptions that later prove to be incorrect. Therefore, it is common for Owners to include a "no warranty" provision that specifies that the Owner will not be responsible for any damages that the Recipient might incur from using the Confidential Information.
[II} Risk of Disclosure: In addition to the "No Warranty" provision, the Owner may also want to provide that any disclosure made by the Recipient of any information is at the Recipient's risk. Because the Owner has already stated that it will not warrant the accuracy of the information, the Owner can further provide that the Recipient will bear the risk of using the information in violation of the agreement. For example, if the Recipient acts on some of the information and the information was inaccurate, the Recipient cannot hold the Owner responsible for the harm caused by the inaccurate information.
[III] Limited License: Generally, the Owner and the Recipient intend that the Confidential Information will only be used by the Recipient for the limited purpose of reviewing the information and becoming familiar with the Owner's business to determine whether the parties might have interest in future transactions (based on some additional agreement). A "limited license" provision makes it clear that the Recipient is not acquiring the right to use the Confidential Information on a general basis.
[IV] General Provisions: A Non-Disclosure Agreement should include provisions that (i) require amendments (changes) to the agreement to be in writing and signed by both parties, (ii) specify the state whose laws will govern and interpret disputes between the parties regarding the matters covered by the agreement, and (iii) prohibit the parties from assigning their obligations under the agreement to third parties. Generally, the state whose laws should govern the agreement should be the state of the Owner or the Recipient.
Specific Issues. 212 922 0005 Kiritsis Law GroupA proper NDA should be the byproduct of a thoughtful and well planned considerations, that accounts for questions, such as:
#1 When will this Agreement become effective? #2 Who will disclose confidential information? #3 What company is disclosing confidential information? #4Who will be receiving the confidential information? #5 Who will receive the confidential information? #6 Why will the Confidential Information be disclosed to the Recipient? #7 Will this Agreement include a non-circumvention clause? #8 Will the Recipient be required to protect the confidential information after the term of the Non-Disclosure Agreement ends? #9 How long will the Recipient be required to protect the confidential information after the term of the Agreement? #10 How long will the obligations of this Non-Disclosure Agreement apply?