Introduction

Non-disclosure agreements (NDAs), are commonly signed in order to protect the secrets and confidential information of big corporations or wealthy individuals. In fact, this often results in sloppiness as the parties might not even read the document! Even so, doing this can be a grave mistake.

Before you sign any contract, be sure you know exactly what you are agreeing to and what the legal document's potential repercussions are. Keep in mind that an NDA is often only a few pages long and is intended to safeguard crucial data like code, algorithms, plans, sales lists, and so on.

Now mind you, an NDA is not a panacea. After all, you risk losing the right to enforce the contract if you don't take even the most basic security measures to safeguard your business's confidential information – like thoroughly reviewing it. In light of this, you must be asking yourself, “what should we focus on when dealing with an NDA?”

Well, don’t stress! Read on to find out what conditions to consider before signing anything.

Things to keep in mind before signing an NDA 

It is crucial to look out for the important clauses and understand them correctly before signing an NDA because even if one clause is not read properly or is found to be missing after you have signed the NDA, it can lead to great losses. 

Thus, always make sure that you look out for these important clauses given below before signing an NDA-

1. Parties to the Agreement

An ambiguous contract is of no use. That’s why your NDA should be clear about the parties and their positions. It should clearly mention which party is disclosing party, or side sharing the information, and the recipient in order to prevent misunderstandings between the parties. The parties' names and addresses must be included in the NDA as well to make it easier to get in contact with them. It should also be including other people who may become a party to the contract such as accountants, attorneys, or business partners.

2. Confidentiality Clause

The confidential information i.e., the information that is needed to be kept hidden must be clear. If the parties don't understand which information is sensitive, how will they keep it confidential? Thus, it’s important to check whether the confidentiality clause is mentioned properly and is easily comprehensible for the parties before signing the NDA. 

3. Obligation of Parties

It is very important for you as a party to check your obligations as a party to the contract. If obligations are vague or not mentioned properly it can lead to confusion between the parties. Thus, obligations must be checked beforehand and negotiated before signing the NDA.

4. Breach

Another important clause you must look out for as a party to the contract is the Breach clause. The party must know what acts will lead to a breach of contract, what will be the repercussions of such acts, etc before entering into the contract. If such a clause is vaguely drafted then it will create a dispute between the parties. Thus, it is important for you to check the breach clause before signing the NDA. 

5. Remedies

There are different kinds of remedies the party might have come up with including injunction i.e. suspending proceedings in order to prevent repeated breaches by the other party, indemnification in case the other party held you liable for breach of contract, the party may get remedies for the same, etc.

Thus, it is crucial to check the remedies clause once before signing the NDA.

6. Duration

The duration of keeping confidential information should be laid down in the contract clearly. It can lead to several years too but should be clearly mentioned in the NDA. If the clause is vaguely drafted, it can lead to dispute and breach of obligation by parties. Thus, it is important to check the duration clause before signing an NDA. 

 7. Exception

Every NDA shall include an exception clause where confidential information can be shared in some exceptional cases such as a doctor, lawyer, etc. It is important to check whether there is such an exception clause in the NDA or not. You must ensure that an exception clause shall be added to NDA before you sign it. 

8.  Jurisdiction

Governing law and dispute resolution is a must-have clause in every agreement including NDA. Any contract shall be made in such a way that both parties should be heard at the time of the dispute so that justice can be delivered to the parties. In case of no such clause in an NDA, it can lead to the waste of months or years of litigation and money. Thus, you should always make sure that the jurisdiction clause is present in an NDA. 

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Conclusion

While it's true that every NDA is different and can include terms not covered above, these are some of the most standard clauses to look for. This ought to help you understand your NDA safely and, perhaps, give you pause if you notice anything dubious in the contract.

Despite the fact that NDAs could seem unnecessarily obtrusive and intimidating, you can better secure your potential legal and financial obligations with the information provided above.