Signing a Non-Disclosure Agreement Template (NDA)? You Need to Pay Attention to These 6 Aspects
Updated: 3 days ago
Confidentiality agreements, often abbreviated as NDA (Non-Disclosure Agreements), play a crucial role in protecting sensitive and confidential information in the business world. Confidentiality agreement templates (NDA templates) are used so that parties to a transaction or involved in a joint project can ensure that the information exchanged between them is not unauthorizedly disclosed or used for purposes not aligned with the project's objectives.
A professionally drafted Confidentiality Agreement Template (NDA template) has specific features that must be understood for correct and effective application. This article aims to provide a detailed perspective on the role of confidentiality agreements, highlighting essential aspects such as key elements and the associated legal implications throughout a contractual relationship, typically between companies.
1. What are Confidentiality Agreements?
A Confidentiality or Non-Disclosure Agreement (NDA) is a contract entered into between two or more parties who commit not to disclose confidential or sensitive information they have access to as a result of establishing a business relationship.
Such confidential information, protected by the confidentiality agreement template (NDA), can be related to production processes, customer databases, business strategies, software, inventions, market pricing, or methods of determining them, and many others. The purpose of a Confidentiality Agreement Template (NDA) is to protect trade secrets and other types of proprietary information.
2. Why use of a Non-Disclosure Agreement Template (NDA)?
Confidentiality is often essential for maintaining competitive advantages. Most industries are characterized by strong competition among market players who invest time and financial resources to find the most suitable business strategies and growth. Do you want the results obtained with efforts to end up in the hands of competitors? Of course not.
Without carefully designed Confidentiality Agreement Templates (NDAs), companies risk seeing their confidential information and business strategies exploited by competitors.
3. When is it useful to use a Confidentiality Agreement Template (NDA)?
Generally, Confidentiality Agreements (NDAs) are popular:
at the beginning and during the negotiations of contracts or business partnerships. A Confidentiality Agreement Template (NDA) is all the more important as uncertainty is specific to negotiations: you do not know if the contractual relationship will be finalized or if the partnership will begin. Therefore, you do not know if you will gain from the negotiating partner. In such situations, it is important to use a Confidentiality Agreement Template (NDA) to ensure that the ideas and concepts you discussed with the negotiating partner are not used further, without your agreement.
in the case of mergers and acquisitions, parties usually conclude a Confidentiality Agreement Template (NDA). In this way, they protect the information provided by the seller about the company and its operations during the due diligence process, as well as the transfer conditions negotiated with the potential buyer.
in the relationship with employees, a Confidentiality Agreement Template (NDA) can keep important business data within the company.
in the relationship with subcontractors who have access to critical business information, a Confidentiality Agreement Template (NDA) is essential for protecting your business interests. By the nature of the relationship, subcontractors generally work with several companies in the same field without exclusivity obligations. The transfer of information from one to another has all the necessary premises and can create undesired effects, especially competitively. A Confidentiality Agreement Template (NDA) can be the difference between protecting your commercial strategy and disclosing it to competitors.
4. Key Aspects of a Confidentiality Agreement Template (NDA), according to Romanian law
Definition of Confidential Information
It is essential that the Confidentiality Agreement Template (NDA) you use specifies in detail what information is considered confidential by the parties involved. In the absence of a universally applicable legal definition, the parties are the ones who contractually establish the scope of confidentiality obligations.
Ambiguity in defining confidential information can lead to difficulties in finalizing and implementing the Confidentiality Agreement Template (NDA) that a business uses. Therefore, it is advisable to include comprehensive definitions, possibly specific examples, which explicate the parties' understanding.
No less, the definition of confidential information should be adapted to the specifics of each Confidentiality Agreement Template (NDA). For example, in the case of a unilateral Confidentiality Agreement Template (NDA), only one party assumes confidentiality obligations – usually the service provider, potential buyer, or external consultant. Therefore, the content of confidential information can be limited only to those information that the beneficiary/seller holds and wishes to protect.
In the case of a bilateral Confidentiality Agreement Template (NDA), both parties assume confidentiality obligations. The definition of confidential information is usually more comprehensive, precisely to include within the scope of protection information that interests both the beneficiary/seller and the provider/buyer.
To appropriately adapt the scope of confidential information from the Confidentiality Agreement Template (NDA), you can order a contract model customized to your business needs.
Duration of confidentiality obligations
It is advisable for the duration of the confidentiality agreement to be clearly stipulated. Common practice is for the confidentiality obligations assumed by the parties to remain in effect even after the termination of the main contractual relationship, for a period between 3-5 years. Some Confidentiality Agreement Templates (NDAs) provide for a longer protection duration (e.g., 10 years) or even an indefinite term.
Using the Confidentiality Agreement Template (NDA) from Docs & Deeds, you can easily customize the duration of protection in the corresponding section.
Sanctions in Case of Disclosure
The clauses regarding sanctions for breaching the obligations of the Confidentiality Agreement Template (NDA) are among the most complex aspects. A widespread practice is the use of a penalty clause.
A penalty clause is an agreement between the parties that assesses in advance the damages payable in case of breaching the confidentiality obligation. Such an agreement aids in the evidentiary plan, as the parties will not be required to prove the amount of damage suffered – a proof quite difficult to make in the context where the damage created through the disclosure of confidential information is not visible, tangible, but rather relates to the business's evolution over time.
Applicable Law and Jurisdiction Clause
It is important for a Confidentiality Agreement Template (NDA) to specify the applicable law and the jurisdiction that will govern its interpretation and application, especially when one of the parties has a different nationality. With some restrictions, commercial partners can freely choose the law that will apply to the Confidentiality Agreement (NDA), as well as the competent court to judge any disputes in case there is a disclosure of confidential information or another type of contractual incident.
Should you be interested in the applicable law and jurisdiction clause? Yes. The law governing the Confidentiality Agreement Template (NDA) can establish specific requirements regarding the form of the contract, such as the necessity of being in writing or authenticated by a public notary, may set rules regarding the interpretation of the contract in case of ambiguity, and can provide solutions for remedy in case of contract breach, such as damages or contract termination.
Similarly, the court that judges any disputes related to the Confidentiality Agreement Template (NDA) is important. The jurisdiction clause, also known as the choice of forum clause, is an essential element of many contracts, as it establishes in advance the court or jurisdiction that will have the competence to solve any disputes arising from or in connection with the respective contract. The jurisdiction clause in a Confidentiality Agreement Template (NDA) ensures both parties have a clear and unequivocal understanding of where disputes can be resolved. This eliminates uncertainty, providing a stable basis for legal and commercial planning. Parties can anticipate and evaluate the costs related to litigation, including travel expenses, attorney fees, and the duration of proceedings in the respective jurisdiction.
5. Legal Implications and Recommended Practices Related to the Non-Disclosure Agreement (NDA)
Using a Non-Disclosure Agreement Template (NDA) like the one from Docs & Deeds brings multiple benefits. Firstly, collaborating lawyers have ensured that the Non-Disclosure Agreement Template (NDA) contains comprehensive clauses regarding the content of protected information. We have included here trade secrets and intellectual property rights that your business holds.
Secondly, the Confidentiality Agreement Template (NDA) is extremely easy to adapt to your situation. Creating an NDA from scratch can be a time-consuming process and may require specialized legal consultation, which implies significant costs, usually of several hundred euros. Using a Confidentiality Agreement Template (NDA) that has already been drafted and reviewed by legal experts can save significant time and financial resources. Templates allow for the quick customization of clauses specific to each party's needs, without the need for drafting the entire document from the beginning.
Thirdly, a well-structured Non-Disclosure Agreement Template (NDA) can facilitate mutual understanding of the terms and conditions of the agreement by both parties. The clarity and standardized structure help avoid ambiguities and allow for the contract model to be reused in relation to other partners.
6. Can you include confidentiality obligations in other contract templates?
When you want to protect your business, you can sign a bilateral confidentiality agreement (NDA) or a unilateral confidentiality agreement (NDA), or you can include confidentiality clauses in other contracts you use in your daily operations.
In practice, confidentiality clauses are often included in:
Choose from the contract templates we offer the one that suits your situation and fill out the contact form if you wish to customize the confidentiality clauses.
