nda -- legal guide: non-disclosure & confidentiality agreement (negotiations of potential...

Legal Guide:Non-Disclosure &Confidentiality Agreement(for use in Negotiations ofPotential Business Relationshipor Joint Venture)

A Beginners Step-by-Step Guide forBusiness Owners, Beginners, andNon-Lawyers

Updated: March 18, 2010

NOTICE TO READER: The information in this article is a brief summary forinformational purposes only. It is not meant to be legal advice. If yourequire information or advice as it relates to your individual circumstancesyou are advised to consult with a lawyer.

Download Legal Forms:• USA: Confidentiality / Non-Disclosure Agreement• Canada: Confidentiality / Non-Disclosure Agreement

http://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

http://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=US

Legal Guide: NDA / Confidentiality Agreement for use in: of 11Potential Business Relationship or Joint VentureDownload: USA: NDA form Canada: NDA form

NOTICE TO READER: The information in this article is a brief summary forinformational purposes only. It is not meant to be legal advice. If you require informationor advice as it relates to your individual circumstances you are advised to consult with alawyer. E.&O.E. ©2010 CanadaLegal.com / Cusimano.Com Corporation

Table of Contents1. Introduction2. When is an NDA / Confidentiality

Agreement Used3. Basics of an NDA / Confidentiality Agreement4. Prepare an NDA / Confidentiality Agreement Now5. Next Steps6. Useful Resources Online

1. Introduction

If you are planning to have discussions or negotiations with a potentialbusiness partner or are considering entering into a joint venturearrangement with another business, it will be necessary during the earlydiscussions and negotiation stage to disclose certain information aboutyour business to the other party to facilitate reaching an agreement with theother business.

However, during the early discussions / negotiation stage you may bereluctant to disclose the information without some form of writtenagreement to protect the legal rights of the parties.

The legal document used to protect your legal rights is a called a“Non-Disclosure Agreement” (also known simply as an “NDA”) or a“Confidentiality Agreement”. All these titles refer essentially to the sametype of document.

2. When Is an NDA / Confidentiality Agreement Used?

An NDA / Confidentiality Agreement is useful under any situation whereyou will need to disclose information to a third party that you consider as

Download Legal Forms:• USA: NDA form• Canada: NDA form


http://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=UShttp://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=US







confidential. This may include information about your business methods,client information, financial information, business proposals, potentialbusiness ideas, new product ideas, or anything else you consider isconfidential and you would like the recipient to not disclose to anyone else.

For example a NDA/Confidentiality Agreement would be useful duringnegotiations / discussions with any of the following situations parties whereyou are considering a business relationship or a joint venture:

(a) another business that you plan to work with as part of a joint venture(b) potential investors(c) potential business partners(d) manufacturers(e) distributors or retail stores(f) other industry players(g) potential customers(h) marketing / promotional companies

Perhaps during your negotiations you may have to disclose certaininformation to the other party which you wish to keep confidential including:

(a) client information(b) methods of doing business(c) supplier information(d) financial information about the business

3. Basics of an NDA / Confidentiality Agreement

An NDA / Confidentiality Agreement usually contains provisions with thefollowing basic elements:

1. Name of the parties

2. Date of the Agreement and the time period for the confidentiality

3. Obligation of recipient not to disclose the confidential information







4. Definition or description of what will be considered as “confidential”(e.g.: client list, or product, or potential business relationship)

5. Exceptions for certain information that is not considered confidential(e.g.: information that is already in the public domain and easilyobtainable is generally not considered to be confidential)

6. Legal rights and remedies available to the disclosing party in theevent that the recipient party discloses Confidential Information (e.g.:the disclosing party will have the right to obtain a court order to stopthe recipient party from disclosing the information).

7. General legal provisions

4. Prepare an NDA / Confidentiality Agreement NowYou can easily prepare an NDA / Confidentiality by filling in an online form.Click one of the following links then follow the instructions below whenfilling out the online form:

• USA: NDA form• Canada: NDA form

Section inonline form: Subsection Additional Notes:

Governing Law Generally, State / Province selected isthe where the disclosing party islocated

Form ofAgreement

Choose formof agreement

You can choose “ConfidentialityAgreement” or “Non-DisclosureAgreement”. Practically, there is nodifference between the two. Choosethe label that you feel mostcomfortable using.














Type ofAgreement:

You have several options to choosefrom. Select:5. Other Purpose. Use this forevaluating a potential businessrelationship with another part (eg. ajoint venture or other businessarrangement.


Number ofPartiesProvidingConfidentialInformation

Select the number of parties who willbe providing confidential information.Normally this will be 1 party, however,you may also wish to include others.

Parties ProvidingInformation

PersonProvidingConfidentialInformation

Enter the name of each partyproviding or disclosing confidentialinformation.It is important to enter in the fullproper legal name of the party and tomake sure that the name is spelledproperly without spelling errors.(a) For an individual: referenceshould be made to a legal documentsuch as a birth certificate, passport,driver’s license, or other governmentissue identification. The name on acredit card is usually not sufficient. Ifthe person usually multiple names,






you may wish to enter the name in aformat as follows:“Bill Smith also known as WilliamSmith”(b) For a corporation: referenceshould be made to the corporation’sofficial incorporation certificate toobtain to proper full legal name of thecorporation.Be sure to enter the address of thedisclosing party. Try to avoid using aPost Office box. An actual address ispreferable. If an individual is reluctantto use their residential address, usetheir business address instead.Specify the type (individual orcorporation) and for individual, alsoenter the gender.

Parties ReceivingInformation

Number ofPartiesReceivingConfidentialInformation

Select the number of parties who willbe receiving the confidentialinformation.Depending on the nature of theconfidential information, even if theparty receiving the information is acorporation, you may also wish toinclude the individuals who will haveaccess to the information. However,sometimes, individuals part of acorporation may be reluctant to benamed as a party to the agreement.










PersonReceivingConfidentialInformation

Enter the name of theperson/company who will be receivingconfidential information.If you are contracting with anindividual, enter the individual’s nameand information. If you are contractingwith a corporation, enter thecorporation’s name.It is important to enter in the fullproper legal name of the party and tomake sure that the name is spelledproperly without spelling errors.(a) For an individual: referenceshould be made to a legal documentsuch as a birth certificate, passport,driver’s license, or other governmentissue identification. The name on acredit card is usually not sufficient. Ifthe person usually multiple names,you may wish to enter the name in aformat as follows:“Bill Smith also known as WilliamSmith”(b) For a corporation: referenceshould be made to the corporation’sofficial incorporation certificate toobtain to proper full legal name of thecorporation.Be sure to enter the address of thereceiving party. Try to avoid using aPost Office box. An actual address is






preferable. If an individual is reluctantto use their residential address, usetheir business address instead.Specify the type (individual orcorporation) and for individual, alsoenter the gender.

Permitted Purpose PermittedPurpose /IntendedUse(s) of theConfidentialInformation

Enter here what permitted uses (orpurposes) that the confidentialinformation may be used for.For example:“The recipient may use theConfidential Information only for thepurpose of investigating the formationof a joint venture”“The recipient may use theConfidential Information only for thepurpose of investigating themanufacture of the disclosing party’sproducts”“The recipient may use theConfidential Information only for thepurpose of developing a softwareinterface to permit its own product tocommunicate with and be compatiblewith the disclosing party’s softwareproduct”










Contractorwill use orcreatecomputertechnology?

Unless the nature of the services theperson/company will be providingdoes not involve the use of anycomputer technology then you shouldselect “yes” for this option.

Duty ofConfidentiality

preventedfromcompeting for

Since a recipient will be receivingconfidential information, the disclosingparty may want to prevent therecipient from using the information tostart a competing business.The longer the period chosen, themore likely that the period will not beenforceable. As such, you need toselect a reasonable period dependingon the nature of confidentialinformation.Select the lowest time frame that isreasonably necessary to protect theinterests of the disclosing party.Some contractors may not beagreeable to this provision, especiallyif they are providing services to othercustomers of theirs.

preventedfrom solicitingemployees for

Since a recipient will be receivingconfidential information about theemployees of the business, thedisclosing party may want to preventthe recipient from using theinformation to approach the


http://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=UShttp://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA




employees to hire them itself.

Duties ofConfidentialitycontinue aftertermination

This section should be completed.Select the lowest time frame that isreasonably necessary to protect theinterests of the disclosing party. Thelonger the period chosen, the morelikely that the period will not beenforceable. As such, you need toselect a reasonable period dependingon the nature of the business and theconfidential information.

Additional Clauses Duties ofConfidentialitycontinue aftertermination

If there are any special obligations,promises, or text you want inserted,use this section.For example, the parties may want toinclude a provision that specifies thatno information may be removed fromthe location of the disclosing party:“the recipient agrees that noconfidential information may beremoved from the offices of thedisclosing party”.

Signing date If you know the date the document willbe effective, select it from the options,otherwise select “unsure” and fill inthe date at the time it is signed.

Execution Date

witnessesrequired

Select “Yes” here, unless you have areason to dispense with a witness.In the event that a party to the








agreement denies that they signedthe document, a witness can servethe purpose to testify that they in factthey were present and saw thedocument signed.A witness should be present and seethe party signing the document.If the parties are not signing thedocument at the same time or in thesame room, then separate witnessesshould be used for each party.

5. Next StepsOne you have completed the form, print out 2 copies and have 2 originalssigned and witnesses. One original should be kept in your records and theother original should be given to the other party.

If during your negotiations you are able to reach an agreement with theother party, you should then proceed to formalize the terms of thearrangement using a Joint Venture Agreement or a Partnership Agreementdepending on your needs. (see links below).

6. Other Useful Resources Online

Downloadable Legal Forms:• Incorporate a company: • USA • Canada• Business Agreements: • USA • Canada• Joint Venture Agreement: • USA • Canada• Partnership Agreement: • USA • Canada


http://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=UShttp://www.lawdepot.com/contracts/confidentiality-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

http://www.lawdepot.com/contracts/partnership-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

http://www.lawdepot.com/contracts/partnership-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=US

http://www.lawdepot.com/contracts/jointventure/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

http://www.lawdepot.com/contracts/jointventure/?pid=pg-JNYJBI64B4-generaltextlink&loc=US

http://www.lawdepot.com/contracts/groups/business/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

http://www.lawdepot.com/contracts/groups/business/?pid=pg-JNYJBI64B4-generaltextlink&loc=US

http://www.lawdepot.com/contracts/groups/corporate/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

http://www.lawdepot.com/contracts/groups/corporate/?pid=pg-JNYJBI64B4-generaltextlink&loc=US

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