Non Disclosure Agreements
Non disclosure agreements
Non disclosure agreements (NDAs), are used by businesses when they want to share confidential information and other intellectual property with a 3rd party, and would like reassurance that that information will be kept confidential.
This might be the case if:
- you are considering a commercial collaboration with another company
- you are seeking to raise money from investors
- you have engaged a consultant or contractor to help you analyse some data or launch a new product
- you are negotiating new services or terms from investors and potential shareholders
How is my confidential information protected in an NDA?
An NDA will normally restrict the use of the confidential information such that it can only be used for a specific purpose, for example, you might show certain sensitive commercial information to a competitor if you are considering a joint venture, they should only be permitted to use that information for the purposes of evaluating the merits of the joint venture, but not their own commercial interests outside that specific purpose.
NDAs are also normally limited in time – normally with the limitations lasting between 2 and 5 years. However, you might want some information to be kept confidential indefinitely. This might be the case for customer lists for example.
It’s worth noting that if the information in question becomes available in the public domain, an NDA can’t be enforced against the third party, unless they cause the information to be released.
What types of NDA are there?
The two main types are one way or mutual NDAs.
You would use a one way NDA if only one party is disclosing confidential information, or a mutual one if both parties are likely to share IP during the course of the discussions.
What happens if someone breaches and NDA?
In most cases, you’ll be able to purse the 3rd party for damages for a breach of contract. Depending on the wording in the NDA, it may also be possible to obtain an injunction to prevent further releases of information.
To quantify the value of the claim for the breach, you may be able to recover a fee that would cover the amount that the other party would, in other circumstances, have paid for a licence for that information. Equally, you may be able to force the other party to account for any profits they made from exploiting the information they used.
Drop us a line if you need an NDA
Rachel Duncan
Head of Legal
0207 043 4000
About the author
Rachel has a wealth of experience in corporate and commercial law, having worked in practice and in-house since she qualified in 1993.
Rachel runs our legal team at Accounts and Legal, and specialises in drafting bespoke commercial contracts, shareholder's agreements, loan agreements, commercial leases and share option schemes.
Her colleagues also have specialisms in employment law and intellectual property, and cover the full spectrum of disciplines required by entrepreneurs and small business owners.
So if you have a specific requirement, or think you might benefit form a company health check, please don't hesitate to drop her a line.
