Nondisclosure Agreements (NDAs) are making headlines daily—from President Donald Trump requiring his senior staff to sign them, to adult film star Stormy Daniels claiming she was coerced into signing one. Aside from these political and perhaps personal uses of NDAs, they are most commonly used in business and can be critical to a business’ success. However, NDAs are often given short shrift. Ordinarily, the parties entering into an NDA are in a good relationship when the NDA is negotiated and signed. But, relationships sour—and a poorly drafted or performed NDA can wreak havoc on a business. It is, therefore, important that NDAs are drafted and performed with care. Some common errors include:

  • Being unable to locate the other party’s “confidential” documents or identify persons who received them when the other party asks you to return or destroy them;
  • Failing to draft the NDA to prevent your competitor from accessing your trade secrets by acquiring the other party;
  • Failing to recognize that, although you have the leverage to impose onerous requirements on the other party to protect your confidential information, the other party may, in turn, try to impose the same requirements on you with regard to their information;
  • Forgetting to advise your employees of the NDA, resulting in them using or disclosing the other party’s “confidential” information in violation of the NDA;
  • Failing to draft the NDA so you can share the other party’s information with your advisers (e.g., financial; legal); and
  • Inadvertently granting the other party ownership of your confidential information by agreeing to a procedure whereby, if the other party sends you a document stamped confidential, the information in it is deemed that party’s confidential information.

NDAs require careful drafting and follow-through in their execution. We offer below some general “best practices” for consideration.

Best Practices

  • High Level Considerations