Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Don’t Negotiate Without It: Tips for Drafting Non-Disclosure Provisions

Author: Donald M. Pepe

Date: February 5, 2013

Key Contacts

Back

Most businesses maintain as confidential various forms of proprietary information like revenue projections, operating expenses, secret formulas, business plans, customer lists and any number of other forms of information that would lose value if widely disseminated. 

At the same time, it is often necessary to share such information to further business goals.  The use of a nondisclosure agreements or nondisclosure clauses (“NDA”s) is one of the best ways to shield such information assets from unintended disclosure.

During business negotiations, nondisclosure agreements can be invaluable. While you may be confident that the deal is going to close, negotiations do not always go as planned. Therefore, it is imperative to make sure that the other party does not walk away with your confidential information.

Through a nondisclosure agreement or clause, businesses can go along way toward ensuring that their information stays confidential.  In cases where information is wrongfully shared or misused, nondisclosure agreements should provide legal recourse, including at a minimum the ability to petition the court for an injunction to prevent further disclosure. Stipulating liquidated damages or providing for the recovery of legal fees might also be appropriate where an injunction would be as affective as closing  the barn door once the horse, or in this case the secret, is already out.

At the most basic level, a nondisclosure agreement is a contract.  The parties exchange mutual promises, on the one hand to release the confidential information and on the other the promise to protect the confidentiality of the information disclosed.

Nondisclosure agreements are not “one size fits all,” but below are some basic elements that should be considered and addressed in drafting NDAs:

  • Define The Information to be Kept as Confidential: Any NDA must define what the parties agree to keep as confidential.  The trick is wording the agreement so it is broad enough to cover all truly proprietary information and narrow enough not to overly burden the parties with compliance concerns.  It is often helpful to provide examples of each category of data covered by the NDA. The agreement should also make it clear that it extends to both written and electronic documents.
  • Consider appropriate Exclusions: To avoid future disputes, it is equally important to define what is not included in the NDA. Again, illustrative examples are often helpful.  It is also helpful to exclude any information that is readily available from another source, such as public records.
  • Address Permitted Uses and Disclosure:  NDAs should specify that the information may only be used for a particular stated purpose, such as exploring a specified business opportunity between the parties. NDAs should also often carve out exceptions for certain people to whom the confidential information may be disclosed, i.e. attorneys, accountants, and other consultants directly involved in the transaction.  The agreement should also provide, where possible, for the methodology of keeping information secret that will be considered acceptable and provisions for the return of confidential information when the relationship ends.
  • Obligations of The Parties: The NDA should state whether the agreement is unilateral (binding only the receiving party) or mutual (imposing confidentiality obligations on both parties).
  • Sunset Provisions: The NDA should specifically state the term of the agreement.
  • Remedies: The nondisclosure agreement should spell out the remedies available to the non-breaching party.  Monetary damages, liquidated damages and injunctive relief should be considered.   Exculpatory provisions should also be considered where the release of otherwise confidential information is compelled by judicial process.
  • Boilerplate Provisions: NDAs should also contain the standard provisions included in most contracts, including jurisdiction, venue, arbitration, etc.

If you have any questions about how to best protect your confidential business information or need assistance drafting a nondisclosure agreement, please contact me, Donald Pepe, or the Scarinci Hollenbeck attorney with whom you work. 

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business post image

The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business

Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]

Author: Dan Brecher

Link to post with title - "The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business"
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1 post image

Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1

The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]

Author: Brian D. Spector

Link to post with title - "Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1"
How Understanding Bankruptcy Trends Can Benefit Your Business post image

How Understanding Bankruptcy Trends Can Benefit Your Business

The bankruptcy legal landscape presents both challenges and opportunities for businesses navigating financial distress. Understanding current bankruptcy trends can help businesses make more informed and strategic decisions. Corporate Bankruptcy Filings Trending Upwards Bankruptcy filings continued to trend upwards in 2024. According to statistics released by the Administrative Office of the U.S. Courts, personal and business […]

Author: Brian D. Spector

Link to post with title - "How Understanding Bankruptcy Trends Can Benefit Your Business"
SEC Takes Actions Against Issuers for Failure to File Form D post image

SEC Takes Actions Against Issuers for Failure to File Form D

In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]

Author: Kenneth C. Oh

Link to post with title - "SEC Takes Actions Against Issuers for Failure to File Form D"
Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda post image

Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda

On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]

Author: Matthew F. Mimnaugh

Link to post with title - "Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda"
What Are FIRPTA Withholding Requirements? post image

What Are FIRPTA Withholding Requirements?

If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]

Author: Jesse M. Dimitro

Link to post with title - "What Are FIRPTA Withholding Requirements?"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!

Please select a category(s) below: