Description

Unilateral Confidentiality Agreement

(Pro-Recipient, Short Form)

This is a short form Unilateral Confidentiality Agreement (pro-recipient), also known as a nondisclosure agreement or NDA.

Summary

Under this form of NDA, one party discloses confidential information to the other in connection with a commercial transaction. Companies that engage in frequent exploratory discussions with potential disclosing parties commonly use this type of confidentiality agreement. Often, those disclosing parties insist on executing a confidentiality agreement prior to holding any discussions. Parties may also use this agreement in situations that support the use of a shorter and less comprehensive form of NDA.

Details

Generally, unilateral confidentiality agreements:

• Preserve the confidentiality of the disclosing party’s sensitive information.
• Restrict the recipient’s use of the disclosing party’s confidential information to limited purposes that are expressly permitted under the agreement.
• Protect the confidential nature of the potential transaction and the discussions held by the parties.

Many commercial businesses are facing an increase in the required use of confidentiality agreements by potential transactional counterparties. This often occurs as a prerequisite to preliminary business discussions about selling the disclosing party’s products or services. However, the proposed confidentiality agreement’s terms may often be inappropriately restrictive for the size and nature of the potential transaction. For example, binding a company’s foreign affiliates or including employee and customer non-solicitation clauses can be inappropriately restrictive. Therefore, businesses should consider developing a standard form of pro-recipient general confidentiality agreement for use in these situations.

Assumptions

This Confidentiality Agreement assumes that:

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

The parties should modify these terms to comply with local laws when organized, operating, or transacting in a foreign jurisdiction.

These terms are being used in a business-to-business transaction.

This agreement may not be suitable for a consumer contract or a government contract. Such contracts may involve legal and regulatory requirements and practical considerations that are beyond the scope of this resource.

There are only two parties to the agreement.

The parties should revise this agreement if it involves more than one disclosing party or more than one recipient. For example, the parties must determine whether the obligations between each recipient are joint, several, or joint and several.

This is a unilateral agreement, which assumes that only one party is disclosing confidential information.

The parties should not use this agreement if both parties are likely to be disclosing confidential information.

Parties use this agreement for a single discrete project, with all confidential information disclosed shortly after the execution of the confidentiality agreement.

Parties must revise this agreement if:

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

These terms are not industry- or deal-specific.

This agreement doesn’t account for industry or deal-specific laws, rules, or regulations that may apply to certain parties or transactions.

This is a short-form agreement that does not include certain types of pro-recipient provisions.

This short-form, pro-recipient, unilateral confidentiality agreement doesn’t include certain provisions that a party receiving confidential information may try to include. For example, this agreement does not include disclosing party representations and warranties, a waiver of consequential and other indirect damages, or confirmation of no legal obligations regarding the potential transaction other than those relating to the use and nondisclosure of confidential information.