This contract tip is about how we need different approaches to confidentiality obligations in non-disclosure agreements (NDA) compared to in a provision that is part of a broader contract.
An NDA is not a confidentiality provision with some boilerplate tacked on.
Yes, they have a lot of overlap, but they are very different contractual relationships. We need to think about them differently.
Here are three reasons why:
1. Relationship context. - Most companies sign NDAs as part of preliminary discussions. There is no deal yet. In contrast, confidentiality provisions are part of a much broader ongoing commercial relationship. What worked for initial discussions may need adjusting for the more important deal.
2. Purpose - The typical NDA restricts the recipient from sharing or using except for a limited purpose. The most common purpose is to evaluate a potential transaction. That purpose doesn’t work when doing a deal for that transaction. Our confidentiality provisions in other agreements need to consider that different scope.
3. Term. - I typically see NDA obligations survive for two to five years and indefinitely for trade secrets. But most broader agreements have confidentiality obligations that survive without time limits.
What other ways are confidentiality obligations different in these two contexts?
