Reviewing a confidentiality agreement or non-disclosure agreement (NDA) is a pretty common task for small and medium business owners.
To pay a lawyer to review all documents can be very costly, and while if you have the budget to engage a lawyer, you’re going to be in a better position – confidentiality agreements are serious legal documents and working with a lawyer is always the best option. Nevertheless, this article sets out some key clauses to look out for if you’re completing the review yourself.
Mutual or one-way?
The first thing to check when reviewing a confidentiality agreement is whether it’s mutual or one-way. A mutual agreement means both parties agree not to disclose each others’ confidential information. It’s the most common type of confidentiality agreement and is of course fair to both parties.
If one of the parties is in a better negotiating position or only one of them is actually disclosing confidential information, then a one-way agreement is sometimes used. This means only one party has obligations under the agreement.
Confidential information
The next important issue to look at is the definition of confidential information. Generally the description will be pretty broad. This is to ensure that as much information as possible is captured under the definition. It’s important that the information set out below is excluded from the scope:
Confidential Information that is:
(a) already in the public domain, except as a result of the actions of the recipient in breach of this agreement; and/or
(b) received from a third party, except where there has been a breach of confidence; and/or
(c) that must be disclosed by law, provided that the recipient reveals only so much of the confidential information as the recipient is required by law to disclose and gives sufficient notice to the discloser in order to allow the discloser to object to, or otherwise prevent, the confidential information being disclosed.
Obligations of the parties
It’s crucial that you review the obligations of the parties to the confidentiality agreement. A confidentiality agreement only works effectively when the recipient has clear obligations with regards to the information. Generally the types of obligations you’ll want to see will of course be that the recipient can’t disclose any confidentially information to third parties, that they will protect the confidentiality information, only use it for the purposes for which is was provided and be responsible for any leaks caused by its employees, agents and contractors.
Damages
Enforcing a confidentiality agreement can be difficult, so you’ll want to ensure that the damages clause allows for monetary damages as well as injunctions and any other remedy at law.
Conclusion
It’s always best to get a lawyer to review a confidentiality agreement; they are serious documents. If that’s not possible, make sure you check the points set out in this article! For more information on confidentiality agreements click here.
