When drafting a Non-Disclosure Agreement, there are several factors you must consider in order protecting all parties involved. More often than not, a Non-Disclosure Agreement is used when confidential information is going to be revealed by one or all parties. When putting this document together, there are key things that should always be included.
First clause that should be included in a Non-Disclosure Agreement simply covers statements made by both parties and requires both parties to keep what is said confidential unless otherwise stated. This mutual agreement means that both sides are at risk and therefore less likely to reveal anything they are not supposed to.
Another clause that should be included in a Non-Disclosure Agreement requires not only non-disclosure, but also non-use. This means that neither party can reveal what they have learned at this meeting to others. It also means that they cannot use the information that they obtained at this meeting for any purpose. They can use the information if it was agreed upon by both parties for a specific reason. Otherwise, everything said at this meeting must stay in the meeting.
Yet another clause includes the definition of what is confidential information. This can be as broad or as narrow a definition as the two parties want to make this. In general, a happy medium should be established so that both parties are confident in how much they can reveal and still keep confidential. The party revealing information can simply state that what they are saying is confidential or the documents that they are revealing are to be kept confidential. This can be problematic in that some things will be marked confidential that would be important for use. This is often why there is a difference in opinion between parties about what should be confidential and not. Thus it is best to try to protect one’s self and their company, but still allow for information that can be used.
In relation to the definition of confidential information, there should be a clause dedicated to exceptions to the clause of confidential information. In most Non-Disclosure Agreements, this includes information already publicly known, information revealed after the agreement through no action or inaction of either party, information already known by the parties, information from a third party, and information found independently. This clause is important in order to relieve either party from potentially breaking the agreement through no fault of their own.
Also, there should be a permitted disclosure clause agreed upon. This will cover any employees that need to be told the information that was obtained in this meeting. In general, this information will be given on a “need to know” basis. Usually it is clearly specified about the individuals or authorities who can know the information and why.
Lastly, the term of the Non-Disclosure Agreement should be agreed upon by both parties. In general, the term of an agreement will last three to five years. If the information is no longer valid or if there is no reason to keep the agreement, it can be lifted at that time. Otherwise, the agreement will stay in place until the term expires. All of the above clauses are important to a successful Non-Disclosure Agreement that both parties can agree to.