Non-Disclosure Agreements

Non-disclosure agreements (NDAs) are contracts designed to let parties (companies or individuals) interact with each other without fear of compromising their confidential information.

NDAs can go by different names. They are sometimes also referred to as confidentiality agreements (CAs) and proprietary information agreements (PIA).

There are two types of NDAs, mutual and unilateral. Mutual NDAs bind both parties to protect each other’s confidential information, whereas unilateral NDAs are bind just one party to protect the confidential information disclosed by the other. In either case, the party sharing confidential information is typically referred to as the disclosing party, and the party receiving it is referred to as the receiving party.

COMPONENTS OF A TYPICAL NDA

Some characteristic components of a typical NDA are:

– A description of the purpose of the disclosure of confidential information

The definition of Confidential Information. Typically this involves a long list of things that are covered (e.g. “plans, financial information, operations, sales estimates, designs, formulas…”), although simpler agreements (which often are easier to get another party to sign) will generally to information that has commercial value to the disclosing party.

– Exclusions to the definition of confidential information. Typically this includes information that

  • the recipient already knew at the time of disclosure
  • is publicly available
  • the recipient rightfully received from a third party
  • the recipient develops independently

– Limitations on use. It is important that the receiving party not only not disclose the confidential information, but also that it only use that information for its intended purpose. An NDA will include language making this clear.

– What the receiving party must do to protect the confidential information. This part of the NDA will typically specify that the receiving party must use the no less care in protecting the disclosing party’s confidential information as it would with its own, and may also allow information to be disclosed to certain other people (such as employees and agents) on a need-to-know basis provided that they also sign an NDA.

– Compelled disclosure. An NDA will typically contain an exception to the confidentiality requirement for information that the receiving party is required to by law or court order to disclose.

– Term. The NDA will typically specify the duration of the obligation to protect confidential information (e.g., “The confidentiality obligations of this Agreement shall remain in effect for two years from the date of this Agreement”) as well as the window in which the agreement applies to information that is newly disclosed (e.g., “This Agreement applies to information disclosed within 1 year of the effective date”).

– Relationship of the Parties. Because NDAs are often signed between parties that in the exploratory phase of a business relationship, they will typically contain language making it clear that the NDA does not oblige the two parties to do business together, create a relationship between them, or convey any intellectual property rights.

Loan Agreements

If you are lending or borrowing money, a written agreement can be essential to ensuring that you and the other party are on the same page (literally) about the loan’s terms. A loan agreement should address payment terms, due dates, interest, and what will happen if the loan is not repaid in time.

COMPONENTS OF A TYPICAL MONEY LOAN AGREEMENT

Some components of a typical money loan agreement are:

– Principal. The principal is the amount of money being loaned.

– Term. What is the duration of the loan? The agreement will specify when the loan begins and the date by which it must be fully repaid.

– Interest. The interest rate of the loan will be specified in the agreement. The agreement will also specify how the interested will be calculated (e.g., simple or compounded at certain intervals) and if the rate is subject to variation.

– Repayment Schedule. The loan might be repayable in a lump-sum or in installments. Either way, the agreement will specify the understanding of the parties.

– Default. If the borrower fails to meet certain obligations specified in the agreement, including making payments as required, then the borrower will be in default. The agreement will specify the consequences of default, including possibly a higher interest rate (a “default interest rate”).

Rent/Lend Agreements

If you are renting, lending or borrowing personal property, like a piece of equipment or a vehicle, it is often a good idea to put the agreement in writing. If you’re the owner, you want to be clear with the person using the property about when it is due back, what type of care they need to take with it, and how much they owe you, if anything, for the usage. If you are the renter or borrower, you can also benefit from such an agreement, for example by noting pre-existing damage to the item so you are not held responsible.

Rent/lend agreements for real estate — for example, leasing or subletting an apartment — are more complicated and potentially subject to greater regulation than rent/lend agreements for personal property. Here we focus on rent/lend agreements for personal property, not real estate.

COMPONENTS OF A TYPICAL RENT/LEND AGREEMENT FOR PERSONAL PROPERTY

Some components of a typical rent/lend agreement are:

– Party Names. The agreement specifies the names of the parties and possibly also includes contact information for them.

– Description of the Property Involved. A detailed description of the item being rented and its condition and identifying characteristics, including (if applicable) an identification or serial number, and any damage or flaws.

– Restrictions on Use. Any restrictions that the owner wishes to place on how the property is used.

– Fees. How much is being charged, and what the basis is for calculating the fees (for example, a flat fee or a daily rate), when payments are due, and any other terms relevant to financing or payment.

– Delivery and Return Date. When the item must be delivered (if applicable) and returned.

– Delivery and Return Location. Where an item will be delivered to (if applicable) and to where it must be returned.

– Property Value, Event of Loss. The value of the property and what the renter will owe the owner if the property is lost or damaged.

– Limitation of Owner’s Liability. Sometimes the agreement will address (and attempt to limit) the owner’s exposure in the event of harm resulting from the renter’s use of the property. The owner may want for the renter to release the owner from any such claims against the owner, and to indemnify the owner against claims from third parties. Another means of limiting the owner’s exposure in the agreement is requiring that the renter be insured against the types of damages that could result from the renter’s use of the property.