Free Non Disclosure Agreement

A Non Disclosure Agreement is an agreement under which a party (the "Recipient") agrees not to disclose proprietary and confidential information ("Confidential Information") that it receives from another party (the "Owner"). This type of agreement may be useful in a variety of circumstances. For example, a company might choose to share information with a web marketing consultant for the purpose improving its on-line sales through its web site. In such a situation, the company would probably be sharing product and customer information with the marketing consultant and would want to protect this information from disclosure by the consultant to third parties.

Some typical provisions that are included for the protection of the Owner include the following:

• 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.

• 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.

• 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.

• 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.

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The Recipient agrees to protect the Confidential Information. This protection is enhanced by limiting the Recipient's authority to make copies, permitting the Recipient to disclose the information only to the Recipient's employees who have an important reason for needing to know the information, and by allowing the Owner to obtain an injunction if it appears that the Recipient may disclose the information.

The Owner can also attempt to further protect the Confidential Information from disclosure by requiring that any written materials be returned upon request.

The Non Disclosure Agreement should state the relationship between the parties. For example, information could be provided as follows:

• The Owner is "engaged in the business of selling computer software and related products."

• The Recipient is "a marketing firm that specializes in marketing computer products."

• Information will be disclosed to the Recipient to enable the parties to determine whether the Recipient could assist the Owner with the development of a marketing plan.

1. The Non Disclosure Agreement should be signed by both parties and becomes effective as of the date specified in the Agreement. It is not necessary that the signatures be witnessed or notarized.

2. It is advisable to sign two copies of the Agreement so that each party will have a copy with original signatures. Original copies should be kept in a fire-proof and safe location or stored securely online.

3. A lawyer should be consulted regarding any issues not addressed by this document.

4. It is helpful for both parties if the Owner clearly marks all pages of all documents as "Confidential" before releasing such information to the Recipient. In addition, the Owner should maintain a list of all documents provided to the Recipient and/or make a copy of all such documents.