Before finalising a confidentiality agreement (i.e. non-disclosure agreement), it is crucial to conduct a thorough review to ensure that all necessary provisions are included and adequately address the protection of confidential information. The following checklist outlines key elements to consider when reviewing a confidentiality agreement.
Parties: Confirm that the agreement identifies the parties involved correctly, including their legal names and addresses.
Definition of Confidential Information: Review the definition of confidential information and ensure that it is clear and comprehensive, covering all relevant types of information that should be protected.
Purpose of confidentiality agreement: It is essential to clearly articulate the objective of the Non-Disclosure Agreement (NDA). This may involve discussing potential business opportunities, evaluating prospective investments, or pursuing similar goals. It is crucial to ensure that the objective of the NDA is explicitly stated and aligns with the underlying reasons for disclosing the confidential information.
Scope of Confidentiality Obligations: Check that the agreement specifies the scope of confidentiality obligations, including whether the obligations are limited to specific information or if they extend to all information disclosed during the agreement's duration.
Permitted Disclosures: Verify if the agreement allows for any permitted disclosures, such as disclosures required by law or with the consent of the disclosing party.
Non-Disclosure Period: Determine the duration of the non-disclosure obligations and confirm that it is reasonable and appropriate for the specific circumstances. It may be a fixed period or extend indefinitely.
Non-Use of Confidential Information: Ensure that the agreement explicitly prohibits the receiving party from using the confidential information for any purpose other than the agreed-upon purposes.
Handling and Protection of Confidential Information: Check if the agreement outlines specific measures that the receiving party must take to protect the confidential information, such as implementing security measures or restricting access to authorized individuals.
Return or Destruction of Confidential Information: Verify if the agreement includes provisions regarding the return or destruction of confidential information once the agreement terminates or at the disclosing party's request.
Remedies: Assess the remedies available in case of a breach, including potential damages, injunctive relief, or other appropriate remedies.
Non-compete: Review the non-compete clause, if included in the confidentiality agreement, to ensure its scope and duration are reasonable. Assess any potential restrictions it imposes on the receiving party's ability to engage in competing activities after the agreement terminates. Consider the necessity and enforceability of the non-compete clause based on the specific circumstances and jurisdiction involved.
Exclusion or limitation of liability. Carefully review any exclusion or limitation of liability clause that addresses indirect or consequential losses. Without proper carve-outs or exceptions, such a clause could potentially undermine the purpose of the NDA, as it may be argued that any losses resulting from a breach of confidentiality could be classified as indirect or consequential. Ensure that the clause does not inadvertently absolve the breaching party from accountability for significant damages.
Governing Law and Jurisdiction: Confirm that the agreement specifies the governing law and jurisdiction that will govern any disputes arising from the agreement.
Entire Agreement and Amendments: Ensure that there is a provision stating that the agreement constitutes the entire understanding between the parties and that any amendments must be made in writing.
While this checklist provides a helpful starting point, it is essential to seek legal advice to tailor the agreement to your specific needs and comply with applicable laws and regulations. Remember, the agreement should accurately reflect the intentions and obligations of the parties involved, providing a solid foundation for safeguarding confidential information.
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