Reviewing and potentially signing a NDA can be an overwhelming responsibility. Candidly, I get a minor headache just thinking about it but without guidance, it could result in legal repercussions so I sought advice from Scott Zucker of Weissmann Zucker Euster Morochnik & Garber P.C.
With his help, this was drafted as a standard example of an acceptable NDA.
It is also important to avoid ambiguous language. In the attached file, “Evaluation Material” clearly defines what information is not readily available to others. Often, these materials are delivered to the receiving party and marked “confidential”. Misuse of these items would constitute a breach. While some materials may not be deemed significant enough to be considered a breach, any disclosure that impacts the valuation can result in a claim.
With respect to cost of breach, this is often challenging to measure as it is a calculation of damages stemming from the disclosure of confidential materials. The attached agreement provides for “injunctive relief”, which enables the court to step in and stop the continued spreading of information and order its return or destruction to prevent ongoing damages.
In the event of a violation of the NDA, the damaged party should give notice to the violating party so they can take steps to rectify the disclosure prior to involving the courts. The example we’ve used leaves an open termination period however the standard is one year and at times, longer so it is crucial to know your time frame.
All NDAs are subject to negotiation and often the parties will agree on additional terms and conditions as part of the transaction. There may be concerns regarding personnel and there could be a request to add non-solicitation of employees. Oftentimes, it is easier to focus on the limited purpose of the agreement, which is to readily share information to create a good faith transaction and protect both parties from improper disclosures to third parties that could use that information to impact the transaction.
It’s crucial to know and understand the terms of your NDA. Fortunately, there are resources to help you throughout the process. For more information, contact Scott Zucker, Partner at the law firm of Weissmann Zucker Euster Morochnik & Garber, at 404.634.4626 or scott@wzlegal.com.
The information and form provided is general legal information and should not be construed as legal advice to be applied to any specific factual situation. If you are unsure whether your particular situation requires that the form be changed, you should consult a lawyer.
