Shhhhhhh– Some Considerations for Those Pesky NDA’s

Rincker Law Business/Commercial Law, Food & Ag Law Leave a Comment

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In many types of business agreements, including agricultural ones, it is important for parties to be able to safeguard information they wish to remain secret. Non-disclosure agreements (“NDAs”) can be helpful in ensuring that information stays between the parties of the agreement.

Put simply, there are two types of NDAs: bilateral and unilateral. A bilateral NDA is one where both parties will be supplying information that is intended to remain secret. This is typical in a business transaction. A unilateral NDA is where only one part wants to disclose information to another party and needs that information to stay secret. You will find this more commonly in employment contracts.

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Some recommended terms to include in the agreement are:

Parties: The parties who will be exchanging the information, whether one or both, should be identified by legal name. address, and state of incorporation, if applicable
Purpose for Exchanging Information: The purpose of the NDA can narrow down which information is to be considered confidential and will also address the usage of the confidential information
Identification of Confidential Information: The definition of what information is considered confidential and what is not should be carefully considered to include each type of disclosure.
Exceptions to Confidential Information: The agreement should have carve-outs for information that is not confidential, such as information known prior to disclosure, in the public domain, or information that is required to be disclosed by law.
How Information Will Be Used and by Whom: Agreement should state who are the permitted parties that the confidential information may be disclosed to and what the relationship is with the parties to the NDA. The agreement should also state what are the permitted uses of the information and that the receiver has an affirmative obligation to not disclose the information.
Methods for Maintaining Confidence: The NDA should require that parties take reasonable safeguards to protect the confidential information and that disclosing party should be immediately notified if there is any possible breach.
Length of Agreement: NDAs are typically for three to five years. The agreement should state the procedures for returning information at the end of the term of the agreement, which can also include destroying or shredding additional copies.
Ownership of Confidential Information: The NDA should clearly state that the disclosing party retains ownership of the information being provided. However, n bilateral agreements where suggestions may be provided to improve the confidential information, the agreement should state that the disclosing party may use the information freely.
Consequences of Breach: This clause should address how disputes will be settled, including which state’s laws will the NDA be interpreted under, and whether attorney’s fees and costs will be recovered by the prevailing party.

In any business it is important to safeguard information relating to the business. Rincker Law, PLLC is prepared to help business owners draft non-disclosure agreements that protect their interests.

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Want more information on contracts for the food and agriculture industry?  Check out my first book that I co-authored with Pat Dillon, an Iowa agriculture lawyer titled “Field Manual: Legal Guide for New York Farmers and Food Entrepreneurs” available on CreateSpace, Amazon, Kindle and iBooks. You can find out more about this book here.  Furthermore, you can check out this extensive outline on common agriculture contracts on my JD Supra page prepared for this presentation

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