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How to Create an Independent Contractor Non-Disclosure Agreement

Independent contractor non-disclosure agreements are useful for preventing contractors from disclosing your company’s confidential information or trade secrets to third parties or using it for their own benefit. This agreement widely defines "Confidential Information" and "Trade Secrets" to ensure your proprietary information remains secure. In addition, the independent contractor non-disclosure agreement does the following:

  • Requires the contractor to protect against the unauthorized disclosure and theft of confidential information or trade secrets by third parties
  • Prevents any reverse engineering by the contractor
  • Gives you the option to include an arbitration provision as well as fully customizable clauses to reflect the full intentions of the parties
  • Requires the contractor to disclose any and all conflicts of interest
  • Requires the contractor to disclose any and all conflicts of interest
  • Gives the company sole ownership of all intellectual property created by the contractor as a result of receiving the confidential information, including copyrights, trademark, and patent rights

Party Information

You will start by first specifying the party that will be disclosing the confidential information (the “Discloser”). A party can be an individual or business entity, but be sure to give each party’s full legal name. You will then enter the same information for the contractor.

Length of Agreement

Next, you will specify when you want the agreement to go into effect and the length of the contractor’s duty of confidentiality to last. Often, the discloser will want the contractor’s duty to last indefinitely. This means that the contractor will be required to maintain confidentiality even after the termination of any business relationship between the parties. If this seems unreasonable under the circumstances, the parties can always opt for a shorter time period.

Disclaimer of Warranties and the Arbitration Provision

Then you will need to choose whether or not the discloser is to disclaim all warranties related to the confidential information. This means that the discloser cannot be held liable should some of the confidential information or trade secrets communicated to the contractor turn out to be erroneous or should the discloser end up not using the information as planned. Typically, the discloser will choose to disclaim all warranties unless express promises were made to the contractor as to the accuracy or future use of the information.

The parties can also choose whether or not disputes will be handled in binding arbitration instead of through the court system. Arbitration allows the parties to resolve disputes more quickly and cheaply. If a dispute occurs, it will be submitted to either a single arbitrator or an arbitration panel in the city listed in the independent contractor non-disclosure agreement. For these reasons, it’s usually a good idea to include an arbitration provision unless you have a good reason not to do so.

Governing Law and Additional Terms

To wrap up the document you will specify which state’s laws you want to govern the agreement as well as any other additional terms you want to include. Usually, the discloser lists its principal place of business as the governing state. Other options would be to use the discloser’s state of incorporation or the state where the two parties are conducting any business together.

You can then add any other terms and conditions desired. This allows you complete flexibility to tailor the document to reflect the specific situation and true intent of the parties. Be sure to preview the independent contractor non-disclosure agreement first though so that you know what’s already been included. After that, just follow the instructions at the end of the document to formally execute it and make sure all parties get a copy of the final version. Presto, you’re done!

Getting Started

Now that you know how these documents work, dive in and create your own independent contractor non-disclosure agreement now!