nda -- legal guide: non-disclosure & confidentiality agreement (potential business purchase...

Legal Guide:Non-Disclosure &Confidentiality Agreement(Potential Business Purchase &Sale)

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 10Potential Business Purchase & SaleDownload: 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

In business matters, it is often necessary to disclose certain information toanother party to facilitate the business matter. However, 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 asconfidential. 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.

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







When purchasing or selling a business the seller may want to keep certaininformation about the business confidential such as:

(a) client contact information

(b) methods of doing business

(c) employee information

(d) supplier information

(e) financial information about the business

3. Basics of an NDA / Confidentiality AgreementAn 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 books and records of the business)

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 Now

You 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

Choose formof agreement

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

Form ofAgreement

Type ofAgreement:

You have several options to choosefrom. Select:1. Potential Purchase/Transaction.Use this option for discussing ofpurchasing or selling a business.Proceed to Step 2a below.










Number ofSellersProvidingConfidentialInformation

Generally, you should only select 1unless there are multiple sellers.If there are multiple sellers, aseparate agreement for each shouldbe used.

Parties ProvidingInformation

PersonProvidingConfidentialInformation

Enter the name of each partyproviding or disclosing confidentialinformation – usually this is the“Seller” (also known as the “Vendor”)of the business.Under certain circumstances, youmay wish to include a company nameand an individual name depending onthe nature of the 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.

Number ofPurchasersReceivingConfidentialInformation

Select the number of people who willbe receiving the information.Even if the purchaser is a corporation,you may also wish to include thedirectors or other officials of thecorporation.

Parties ReceivingConfidentialInformation

PersonReceivingConfidentialInformation

Enter the name of each party who willbe receiving confidential information –usually this is the “Buyer” (also knownas the “Purchaser”) of the business.Under certain circumstances, youmay wish to include a company nameand also any individual namesdepending on the nature of theconfidential information. The purposeis to prevent the individuals fromdisclosing the information under their








capacity as individuals.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 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.








Asset Description Enter a general description of thebusiness being purchased.e.g. “all of the assets of the consultingbusiness known as ABC ComputerConsulting”If the purchase only relates to acertain asset, specify the asset. e.g.:“customer list of ABC ComputerConsulting”.

preventedfromcompeting for

Since a recipient will be receivingconfidential information, the Sellermay want to prevent the purchaserfrom using the information to start acompeting business.Usually a potential purchaser is notagreeable to having this sectioninserted. If the Purchaser isagreeable, select the lowest timeframe that is reasonably necessary toprotect the interests of the Seller.

Duty ofConfidentiality

preventedfrom solicitingemployees for

Since a recipient will be receivingconfidential information about theemployees of the business, the Sellermay want to prevent the purchaserfrom using the information toapproach the employees to hire themitself.Usually a potential purchaser willagree to having this section inserted.If the Purchaser is agreeable, select








the lowest time frame that isreasonably necessary to protect theinterests of the Seller.

Duties ofConfidentialitycontinue aftertermination

This section should be completed.Select the lowest time frame that isreasonably necessary to protect theinterests of the Seller. However,depending on the nature of theconfidential information, it may beappropriate to select “indefinite”.

Additional Clauses 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 theprocedure for disclosure: Forexample:“access to Seller’s books and recordsand other information will be providedonly during business hours at theoffices of the Seller”.

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 theagreement denies that they signed








the 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 Steps

One 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.

When you are ready to proceed to the next step of actually selling thebusiness, the parties should enter into an agreement of Purchase andSale – you can obtain one online (see links below).

6. Other Useful Resources OnlineDownloadable Legal Forms:

• Agreement for Purchase and Sale of Business:• USA • Canada

• Business Agreements: • USA • Canada• Employee Agreements: • USA • Canada• Consulting / Services Agreements: • USA • Canada





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/business-purchase-sale-agreement/?pid=pg-JNYJBI64B4-generaltextlink&loc=CA

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

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