In the bustling business landscape of New York, the initiation of deals often involves a critical document known as a “Confidentiality Agreement” or “Non-Disclosure Agreement (NDA).” These contracts play a pivotal role in governing the exchange of sensitive information between parties, ranging from employers hiring or firing employees to tech companies safeguarding trade secrets and individuals exploring potential business relationships.
Despite their concise length, typically one or two pages, NDAs carry significant legal implications for both parties involved. Before committing yourself or your business to such an agreement, consider the following points:
1. Choose the Right Form: Unilateral or Bilateral: Determine whether a unilateral or bilateral (mutual) non-disclosure agreement is appropriate based on whether both parties are sharing confidential information. Clearly specify if the information exchange is one-sided, expressing that you neither seek nor will accept the other party’s confidential information.
2. Define “Confidential Information” Clearly: Ensure your NDA precisely defines the type of information to be kept confidential, especially if there’s an obligation to protect disclosed information. Avoid overly broad definitions that could impose unreasonable secrecy burdens or complicate future business prospects. Consider including provisions excluding publicly available information or data acquired independently.
3. Identify the Purpose of the NDA: Clearly outline the business purpose for limiting the disclosure and use of confidential information. This could be evaluating a potential transaction or fulfilling obligations as an employee. A specific business purpose serves as the foundation for applicable access and use restrictions.
4. Establish Time Limits: Pay attention to clear time limits for confidentiality obligations, both for the NDA itself and the period during which confidential information must remain secret. Longer confidentiality periods increase the administrative burden on the receiving party. For New York businesses with trade secrets, consider separate time limits for different types of confidential information.
5. Protect Disclosed Information: If you’re the disclosing party, consider measures such as requiring the recipient to return or destroy confidential information after a specified period or when the NDA ends. Address electronic data by negotiating procedures for receiving, storing, returning, and destroying it.
6. Address Breach Consequences: Understand the potential claims and remedies in case of an NDA breach. New York law provides avenues for claims like breach of contract, misappropriation of trade secrets, and breach of fiduciary duty. Injunctive relief, attorney fees, and monetary damages are common remedies, and including a liquidated damages clause can help estimate potential harm.
Despite its conciseness, an NDA holds significant weight! To consult with a legal professional at Pitcoff Law Group, call: (646) 386-0990 or email: info@pitcofflawgroup.com today. Let’s ensure that your confidentiality agreement is well-drafted in terms of scope, subject matter, and duration — together.