I’ve seen it so many times: a client is presented with what they believe is a “standard non-disclosure agreement” (NDA) and when they ask me to give it a quick look over before they sign (or sometimes after they have signed!) it is anything but a standard non-disclosure agreement.
Often parties are in such a rush to enter into important negotiation discussions that they forget the hidden dangers that can be included by a party in a ‘standard NDA’. Some of the hidden tricks I have seen include the following:
1. Transferring ownership of IP – sometimes an NDA may include a right to ownership of any IP that may arise during discussions. This may not be your intention at all.
2. Exclusivity – sometimes an NDA may include a clause which prevents you from disclosing or entering into a discussion on the same topic with another party. Whist this can be a legitimate clause in an NDA, it’s important that both parties are aware of the impact of this clause and its implications. It could shut you out from negotiating with multiple parties at one time.
3. Non-compete – The other party may try to include a clause along the lines of a non-compete provision which prevents you from competing with them either in relation to the subject matter of the NDA or other aspects of their business.
4. Warranties – the other side may include warranties and representations that you give stating that the information you provide is true, accurate and complete and that they may rely on it. Generally in the NDA phase its better to avoid giving such warranties, especially if you are having informal ‘off the cuff’ discussions.
We hope this helps you avoid some tricky situations. If at all in doubt, have your lawyer give the document a once over to make sure you don’t sign on the dotted line without knowing your rights and obligations!
I’ve worked with clients from a variety of industries to draft, review and negotiate their non-disclosure agreements. You are welcome to give me a call on 1300 033 934 or at for a no-obligation chat if you are thinking of entering an NDA or need help to review one.