Non-disclosure agreements are one of the best tools to keep your company's valuable trade secrets and other proprietary information under wraps when conducting business transactions. If you don't take the proper precautions, you could soon find your sales plan in the hands of the competition.

In basic terms, a non-disclosure agreement or NDA is a legal contract in which the parties agree to maintain the confidentiality of certain information that is shared during the course of the business transaction. The contract provides legal recourse should one of the parties fail to comply with the terms by disclosing the secret information to an unauthorized third party. NDAs are frequently employed during business negotiations as well as included in employment agreements.

While every NDA should be drafted to address the specific circumstances of the parties, below are several essential provisions that should always be considered when drafting these contracts:

• Description of information to remain confidential: The key provisions of any NDA will describe the information to be kept confidential. There is a fine line between drafting an agreement that is expansive enough to encompass all proprietary information and narrow enough not to unnecessarily burden the parties. To avoid confusion, NDAs should also provide examples of what is considered confidential and non-confidential information.
   
• Obligations of the parties: Agreements can be unilateral (binding only the receiving party) or mutual (imposing confidentiality obligations on both parties). The NDA should also expressly state the purpose of the agreement, i.e. to explore a specific business opportunity, and list exceptions to the duty of nondisclosure. In most cases, the NDA will list specific individuals to whom the confidential data may be disclosed, i.e. lawyers, accountants, and other advisors participating in the transaction.
   
• Term of the agreement:
  The non-disclosure agreement should specifically state when the contract will expire. The length of the agreement will depend on the circumstances, but NDAs generally last for a period of three to five years.
   
• Remedies in the event of disclosure:
  The NDA should detail the legal remedies available should information be disclosed in violation of the agreement. Typical remedies available to the non-breaching party include monetary damages, liquidated damages, injunctive relief, and recovery of attorney's fees.
   
• Standard contract provisions:
  Non-disclosure agreements should also include boilerplate contract provisions with respect to attorney's fees, arbitration, forum selection, choice of law, etc.

   How We Can Help

Given the importance of any NDA, it is advisable to consult with an experienced attorney. Our firm has the knowledge and skills required to successfully draft and enforce these key contracts.

Contact us today to schedule an initial consultation.