Description

Mutual Confidentiality Agreement (Short Form)

Confidentiality Agreement – Mutual (Short Form) Preparation Form – We recommend that you gather the information in this form prior to accessing the online questionnaire.  Doing so will help you efficiently create your custom Confidentiality Agreement (Short Form NDA).

Summary

This is a short-form mutual confidentiality agreement (also known as a nondisclosure agreement or NDA). This agreement assumes that each party is disclosing and receiving confidential information under a mutual set of rights and obligations. Thus, parties may use this agreement for various commercial relationships and transactions that support using a short-form mutual agreement. Because each of the rights and obligations in a mutual confidentiality agreement applies to both parties, parties should use this agreement to address the high-level concerns of both a disclosing party and a recipient.

Details

Parties to a potential commercial transaction often use a confidentiality agreement to:

• Preserve the confidentiality of the disclosing party’s sensitive information.
• Restrict the recipient’s use of the disclosing party’s confidential information except for limited purposes that are expressly permitted under the agreement.
• Protect the confidential nature of the potential transaction and the discussions they are holding.

However, sometimes, only one party discloses confidential information.  For example, parties often use a short-form pro-discloser unilateral confidentiality agreement when they seek terms favoring the disclosing party.  Alternatively, parties often use a short-form pro-recipient unilateral confidentiality agreement when they seek terms favoring the receiving party.  On the other hand, in other situations, both parties disclose and receive confidential information.  In these instances, the parties enter into a mutual confidentiality agreement that applies the same set of rights and obligations to each party based on their role as the disclosing party or recipient.

This short form NDA reflects a balanced and relatively moderate approach.  When drafting or reviewing this agreement, each party should:

• Determine whether it is more likely to be disclosing or receiving confidential information (and the nature of that information, including whether that information qualifies as a trade secret).
• If appropriate, revise the provisions of this agreement to better support its primary position.

Assumptions

This mutual confidentiality agreement assumes that:

The parties to the agreement are US entities and the transaction takes place in the US.

Parties may need to modify these terms to comply with local laws.  Thus, parties should consider modifying these terms if organized or operating in a foreign jurisdiction.  Additionally, parties should consider modifying these terms if their transactions take place in a foreign jurisdiction.

Parties are using these terms in a business-to-business transaction.

Parties should not use this Confidentiality Agreement in a consumer contract.  Because those contracts may involve legal and regulatory requirements and practical considerations, they are beyond the scope of this resource.

This is a mutual agreement, which assumes that both parties are disclosing and receiving confidential information.

Parties should not use this agreement when only one party discloses confidential information. Additionally, parties must revise this agreement if they are not sharing confidential information on a fully mutual basis. Likewise, parties must revise this agreement when entering into a reciprocal confidentiality agreement that contains party-specific rights and obligations to reflect any differences in the scope and type of confidential information that each party expects to disclose.

This agreement is for a single discrete project, with all confidential information disclosed shortly after executing the agreement.

Parties must revise this agreement if:

• the parties desire to enter into a confidentiality agreement that covers multiple projects; or
• parties disclose confidential information over an extended period of time.

The parties are not direct competitors.

If the parties to the confidentiality agreement are direct competitors (who are, for example, pursuing a potential joint venture arrangement), they may need to revise this agreement to:

• confirm that the agreement does not restrict the parties’ ongoing competitive activities;
• protect independent development;
• restrict the persons at each company that a party may contact to request, receive, and discuss any confidential information;
• restrict access to certain types of confidential information to each party’s independent external advisors or to executives working at the corporate (non-operating) level; or
• provide for non-solicitation of either party’s customers, suppliers, or employees (noting that a mutual non-solicitation provision is more likely to be held anti-competitive and, therefore, unenforceable).