What do confidentiality agreements, non-disclosure agreements (NDAs), trade secret restrictions and gagging orders have in common? They’re all the same thing.

Most often referred to as an NDA, the purpose of such agreements is to restrict the disclosure of information from one person to any other. There’s limited scope on how effective an NDA can be – read more on that here.

As evidenced by the press coverage in 2018, NDAs have also come under scrutiny for their moral complexities. It should not be forgotten that, regardless of the intent of the parties, a contract cannot be binding if it requires someone to break the law – there is no circumstance where an NDA should prevent an individual for reporting a crime to the police.

The limitations of NDAs should not, however, lead anyone to underestimate their power. From looking at our own client base and the frequency of questions and advice given on NDAs they are by far the most popular contract exchanged between businesses that the IP team at Stephens Scown are asked to advise on. Below are the top seven takeaways based on what we see when it comes to NDAs:

  • Who is keeping what secret? This sounds obvious, because it is. And yet so many NDAs fail to be specific about who will keep what secret – obviously you don’t want to put the secret information in the agreement itself, but defining what the subject of the NDA will be is a good idea.
  • How long will it last for? If you say “forever”, is that even possible – or fair? Or does that mean for the length of the agreement, in which case the other party may terminate in order to disclose the information without the threat of come back.
  • What happens if there is a breach? Ordinarily you’d be put back into the position you’d be in had the breach not occurred, but that’s a little bit tricky – so do you have the ability to seek an injunction? Best practice says that if you want that sort of remedy, spell it out.
  • What’s the consideration? All contracts need to have consideration – money or monies worth exchanged from one party to the other. There’s lots of ways of dealing with this, but the most important point is to deal with it.
  • Is it even binding? If you can’t show that everyone has agreed to the NDA (usually by signing it) then it is going to be very tricky to enforce. Having it signed by all parties and dated is the best solution.
  • Is it under English law? If the NDA is based in another country, or governed by the laws of another country, then you may struggle to enforce it – or it may be unenforceable. Seek local advice as necessary.
  • Is it even an NDA? Amazing as it may seem, quite a few of the “NDAs” we are asked to advise on aren’t even NDAs – they are partnership agreements (where all parties are jointly and severally liable for the debts of the other) or they’re investment agreements, or they’re heads of terms. Just because it’s called one thing, doesn’t mean it isn’t another.

If in doubt, you should always seek the advice of a professional. Stephens Scown IP and IT team have a track record of assisting clients in relation to confidentiality contracts and NDAs.