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Use a confidentiality agreement, also called a non-disclosure agreement (NDA), in order to prevent others from making unauthorized disclosures of confidential information or trade secrets or using it for their own benefit. LegalNature's confidentiality agreement gives you the option to create a standard NDA (unilateral), a mutual NDA (bilateral), an employee NDA, or an independent contractor NDA.

Note that this help guide refers to two main parties: the disclosing party and the recipient of the confidential information. Depending upon the type of confidentiality agreement you create, these parties may instead be called the employer and employee or the employer and contractor.

Confidentiality

This agreement uses a comprehensive definition of "confidential information" and "trade secrets" to ensure any and all proprietary information remains well protected. The recipient is required to exercise the utmost diligence and his or her best efforts to guard and protect against unauthorized disclosure or theft of confidential information and trade secrets. If the recipient learns that someone else is making unauthorized disclosures, the recipient is required to notify the disclosing party.

Specific Confidential Information and Trade Secrets Protected

You have the option to specify the specific information that the contractor is required to keep confidential. This basically allows you to add your own classes of confidential information to the general definition included in the agreement. Including this information here may help clarify the expectations of the parties and support them should there ever be a dispute. Be sure to review the definitions of "confidential information" and "trade secrets" first to see whether they cover your needs.

Agreement Length

The recipient's duty of confidentiality can last as long as is needed for the parties' business purposes. Depending on the circumstances, the parties may agree on a length as short as a few months or may agree to make the duty last forever. It is best practice to limit the duration to as short as is necessary to protect the disclosing party's interests.

Disclaimer of Warranties

Most of the time it is a good idea to disclaim all warranties as to the confidential information and trade secrets. The main instance that you would not disclaim warranties is if the disclosing party has made express promises to the contractor that the information is correct and how the information will be used.

Dispute Resolution

It is usually recommended that you include a mediation and/or arbitration provision. This will require disputes to be settled through mediation or binding arbitration and avoid the time and expense of going through the formal court system.

Next, you will indicate which state's laws will govern the agreement. Usually, the disclosing party lists its principal place of business or residence as the governing state. Other options would be to use the disclosing party's state of incorporation or the state where the two parties are conducting any business together.

Additional Terms

You can add additional terms and conditions as desired. This allows you complete flexibility to tailor the document to reflect the specific situation and true intent of the parties, but be sure to preview the agreement first so that you know what has already been included.

Executing Your Agreement

  • Have all parties sign and date the signature lines where indicated. Electronic signatures are allowed by the terms of the agreement. The parties can also sign copies sent to each other by email, fax, or other electronic means. If you include an arbitration provision, make sure that each party signs the arbitration exhibit.
  • Make sure that all parties get a copy of the fully executed agreement.
  • That's it! You can now rest assured that the disclosing party's confidential information will remain safe and secure.

Frequently Asked Questions

What is the difference between non-disclosure, non-compete, and non-solicitation clauses?

A non-disclosure clause prohibits the disclosure of confidential information to third parties, a non-compete clause prohibits specific activities that compete with a business, and a non-solicitation clause prohibits solicitation of a business's customers, employees, or similar business relationships.

Also note, a non-circumvent clause is a similar term often appearing within non-disclosure agreements where one party is receiving confidential information related to a potential business transaction. The clause prohibits the recipient from pursuing or carrying out the transaction without the disclosing party's prior written consent. It also often prohibits the recipient from contacting other interested parties to the transaction. Essentially, this means the recipient may not cut the disclosing party out of the deal by attempting to transact with the other parties to the deal directly.

All of these terms commonly appear in business contracts and human resources forms, often in the same document. The clauses normally specify for how long and to which parties to the agreement they apply. Some state courts and legislatures have created laws that set limitations on these clauses, including how long, to whom, and even where (geographically) they may apply.