To disclose or not to disclose

TO DISCLOSE OR NOT TO DISCLOSE?

The Question of Non-Disclosure Agreements

If you are contemplating entering into a business relationship with someone, the first agreement you may encounter is a non-disclosure agreement (NDA). NDAs are used, among other times, when starting new businesses; acquiring new technology or other operational needs; and in the discussions to purchase or sell an existing businesses. Often times, one party to such a discussion will suggest that an NDA be executed and present the other party with a form agreement.

The following is a checklist for you to consider when either receiving or creating an NDA:

  • Is the agreement unilateral or mutual – in other words, is one or both parties restricted from disclosure?
  • Must the disclosed information be “marked” confidential?
    • If so, how is verbal information deemed confidential?
  • Is the limitation on both the use and the disclosure of the information, or just the disclosure?
  • Is there inclusion of any basis for disclosure?
  • What damages are available in the event of disclosure? Is it simply injunctive relief or are money damages contemplated?
  • How is the information returned to the source?

Please also be attentive to standard contract language such as:  jurisdiction, venue, governing law, and attorneys’ fees.

An NDA is an agreement like any other. As such, you can and should negotiate the terms of the NDA before signing it. You should view this as a second or third step in your overall discussions rather than your first in forging your new business relationship.

I cannot advise you strongly enough to have an attorney assist you in this process. Gordon Law has been involved in the negotiation and drafting of countless NDAs and remains available to assist you in this process.

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