Confidentiality clauses are one of the most common types of B2B contract provision, and confidentiality agreements are one of the most common types of B2B contract. Almost all businesses will execute a confidentiality agreement at some point, and some sign dozens every day.
This particular agreement template is designed for "mutual" disclosure situations: that is, situations where two businesses are disclosing confidential information to one another.
In this template, the definitions and core obligations are mirror images, but they can be adapted so that parties' obligations diverge, as required.
Core confidentiality obligations in the NDA
The core obligations are as follows.
- First, there is an obligation to keep the information in question confidential. This is the essence of a confidentiality agreement, and some of the other core obligations are in fact elaborations of this principle, rather than distinct obligations.
- Second, the document includes a prohibition upon the disclosure of the information to any person, save where expressly permitted by the agreement. Exceptions to the non-disclosure principle include: (i) where the disclosing party has given its written consent to disclosure; (ii) disclosure to specifically identified categories of person (eg employees); and (iii) disclosures required by law.
- Third, the template incorporates an express requirement that information be held in a reasonably secure manner. What exactly this requires will depend upon context. You may wish to add specific security obligations over and above this general requirement.
- Fourth, the recipient may be required to act at all times in good faith.
- Fifth, the uses to which the information may be put may be restricted to a "permitted purpose" that is clearly defined.
Standard vs premium NDA
The standard NDA is simply a cut-down version of the premium NDA. The additional clauses in the premium document cover such matters as: publicity-related obligations; intellectual property rights in information disclosed; data protection issues; and indemnities.
Publicity: The premium template provides that neither party may make public disclosures relating to the agreement. However, the parties may agree to specific permitted public disclosures.
IPR: Intellectual property rights are not assigned or transferred under this NDA, nor is there any licence of intellectual property rights.
Data protection: Personal data is often shared when information is disclosed under an NDA. To aid compliance with the Data Protection Act 1998, this template incorporates a data processor clause under which each party warrants to the other that it may legally disclose personal data. The clause also establishes limits on the processing of data, and affirms that a party processing personal data has established suitable security measures for handling the data.
Indemnities: The parties have the option of including indemnity clauses, providing for more generous compensation in the event of a breach of contract.