Legally Easy

Do you have an idea for a new product or service? Need to discuss it with potential customers, investors or perhaps even competitors? If so, think about protecting your idea with a simple confidentiality agreement (also known as a “Non-disclosure Agreement, or “NDA” for short).

A Nondisclosure Agreement is contract under which the person (or organization) receiving information from anther person (or organization) agrees not to disclose proprietary and confidential information that it receives in this context. This type of agreement may be useful in a variety of circumstances. For example, a company might choose to share information with a sales consultant for the purpose improving its sales performance. In such a situation, the company would probably be sharing product and customer information with the 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 Nondisclosure 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.

The easiest way to complete and save a Non-disclosure Agreement for your records is the Easy Non-disclosure Agreement interview at RocketLawyer.com.

Labels: confidentiality, confidentiality agreement, intellectual property, legal, legal forms, nda, non-disclosure agreement