Know your NDA

When I used to head legal for an investment bank in Dubai, the CEO gave me a confidentiality agreement for review and told me how delighted he was to receive a ‘one-page’ document. He suggested that we should amend our templates to make them no longer than one page. I said, sure – we can reduce the font size – but they might become too difficult to read!

Before you start discussing business opportunities, you almost always sign a confidentiality agreement, and often, you may not consult lawyers before you execute one. In many cases, it might be a template downloaded from the internet! But, are you doing it right? Are you protected? You might be surprised to know that in some cases, the agreement is not worth the paper on which it is written!

The length of your confidentiality agreement depends on the conditions under which you are executing it, but below are some tips to improve the chances of its provisions protecting your rights. Ask yourself these questions and try to answer objectively:

1. Who/what am I protecting? - Concentrate on categories of information rather than trying to define specific items. Using the wording, ‘all information’ may not help as it would make the definition too broad and difficult to enforce. Is there any personal data which is covered by data-protection laws? Who does the information belong to - clients, group companies, etc.?

2. Who will disclose the information? - (E.g. your employees, advisors, officers, representatives or agents).

3. Who will have an obligation to protect from unauthorised disclosure? - (E.g. the recipient, its employees, advisors, officers, representatives or agents). It would be good to include all persons that may receive the information (from you or the recipient) and make the recipient responsible for their actions.

4. How will the information be used? - (E.g. Is it a project you are working on with the recipient; is the recipient looking to acquire you; is the recipient going to provide you services?) Try and limit the purpose for which the recipient uses the information.

5. Have I disclosed any information already that may need to be protected? - If this is the case, it would be best to execute the document as a deed; otherwise, the agreement will not be enforceable in relation to the information provided before execution. Else, look to add a nominal consideration that you have paid, of which the recipient has confirmed receipt.

6. How long should the information remain protected? From when; till when? Remember to make sure that the obligation survives termination.

7. What exclusions/exceptions can I give? - This usually depends on the nature of the party with whom you are dealing. Generally, try and limit these exclusions to only those necessary. Let the recipient convince you.

8. Have I signed any confidentiality agreements, the terms of which need introduction into this one? – You may be disclosing someone else's information (which is governed by their confidentiality agreement). Make sure your document is at the least, as restrictive as theirs.

9. Have I retained my intellectual property rights in the information? – You may wish to retain all intellectual property rights in the information and any information derived from it.

10. Do I need to place an obligation of non-circumvention? – Limit the other party’s use of confidential information and impose a specific duty not to use it to circumvent your business interests.

11. What should happen on termination? - Should the information be returned, or should it be destroyed? What obligations will continue after termination?

12. What do I need the other party to do if there is a breach? How can the breach be contained? Is the recipient obligated to report? What measures can be taken to avoid further breaches?

13. How are my rights protected if there is a breach? Should someone else (for, e.g. clients) also have the right to take action if there is a breach that has caused damages? Can I stop the other

party from breaching persistently? What damages am I entitled to claim? Who will pay for the costs of me exercising my rights?

14. Are the parties exchanging the document by email or are they signing it physically at a meeting? Consider placing a counterpart clause if the document is being exchanged by email.

These are not all the issues you will encounter in a confidentiality agreement but will cover most of the pertinent aspects. As a start, if you try and find answers to these questions, you should be able to gauge the extent to which you and your information are protected.