This mutual nondisclosure agreement is between
Each party wants to review, examine, inspect, or obtain the other party's confidential information only for the above-described purposes, and to otherwise maintain the confidentiality of that information pursuant to this agreement.
The parties therefore agree as follows:
1. CONFIDENTIAL INFORMATION.
Each party (in such capacity, a "Disclosing Party") may (but is not required to) disclose certain of its confidential and proprietary information to the other party (in such capacity, a "Receiving Party"). "Confidential Information" means:
- (a) information relating to the Disclosing Party or its current or proposed business, including financial statements, budgets and projections, customer identifying information, potential and intended customers, employers, products, computer programs, specifications, manuals, software, analyses, strategies, marketing plans, business plans, and other confidential information, whether provided orally, in writing, or by any other media, that was or will be:
- (i) provided or shown to the Receiving Party or its directors, officers, employees, agents, and representatives (each a "Receiving Party Representative") by or on behalf of the Disclosing Party or any of its directors, officers, employees, agents, and representatives (each a "Disclosing Party Representative"); or
- (ii) obtained by the Receiving Party or a Receiving Party Representative from review of documents or property of, or communications with, the Disclosing Party or a Disclosing Party Representative; and
- (b) all notes, analyses, compilations, studies, summaries, and other material, whether provided orally, in writing, or by any other media, that contain or are based on all or part of the information described in subsection (a) (the "Derivative Materials").
2. OBLIGATION TO MAINTAIN CONFIDENTIALITY.
- (a) Confidentiality. The Receiving Party shall, and shall ensure that each Receiving Party Representative, keep the Confidential Information confidential. Except as otherwise required by law, the Receiving Party and Receiving Party Representatives may not:
- (i) disclose any Confidential Information to any person or entity other than:
- A. a Receiving Party Representative who needs to know the Confidential Information for the purposes of its business with the Disclosing Party; and
- B. with the Disclosing Party's prior written authorization; or
- (ii) use the Confidential Information for any purposes other than those contemplated by this agreement.
- (i) disclose any Confidential Information to any person or entity other than:
- (b) No Reverse Engineering. The Receiving Party may not reverse engineer, disassemble, or decompile any prototypes, software, or other tangible objects that embody the Disclosing Party's Confidential Information and that are provided to the Receiving Party under this agreement.
- (c) Term. The Receiving Party shall, and shall require each Receiving Party Representative to, maintain the confidentiality and security of the Disclosing Party's Confidential Information until the earlier of:
- (i) such time as all Confidential Information of the Disclosing Party disclosed under this agreement becomes publicly known and is made generally available through no action or inaction of the Receiving Party; or
- (ii) the third anniversary of the disclosure. However, to the extent that the Disclosing Party has disclosed information to the Receiving Party that constitutes a trade secret under law, the Receiving Party shall protect that trade secret for as long as the information qualifies as a trade secret.
3. EXCLUSIONS.
The obligations and restrictions of this agreement do not apply to that part of the Confidential Information that:
- (a) was or becomes publically available other than as a result of a disclosure by the Receiving Party in violation of this agreement;
- (b) was or becomes available to the Receiving Party on a nonconfidential basis before its disclosure to the Receiving Party by the Disclosing Party or a Disclosing Party Representative, but only if:
- (i) the source of such information is not bound by a confidentiality agreement with the Disclosing Party or is not otherwise prohibited from transmitting the information to the Receiving Party or a Receiving Party Representative by a contractual, legal, fiduciary, or other obligation; and
- (ii) the Receiving Party provides the Disclosing Party with written notice of such prior possession either (A) before the execution and delivery of this agreement or (B) if the Receiving Party later becomes aware (through disclosure to the Receiving Party) of any aspect of the Confidential Information as to which the Receiving Party had prior possession, promptly on the Receiving Party so becoming aware; or
- (c) is requested or legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar process), or is required by a regulatory body, to be disclosed. However, the Receiving Party shall:
- (i) provide the Disclosing Party with prompt notice of any such request or requirement before disclosure so that the Disclosing Party may seek an appropriate protective order or other appropriate remedy; and
- (ii) provide reasonable assistance to the Disclosing Party in obtaining any such protective order.
If a protective order or other remedy is not obtained or the Disclosing Party grants a waiver under this agreement, then the Receiving Party may furnish that portion (and only that portion) of the Confidential Information that, in the written opinion of counsel reasonably acceptable to the Disclosing Party, the Receiving Party is legally compelled or otherwise required to disclose. The Receiving Party shall make reasonable efforts to obtain reliable assurance that confidential treatment will be accorded any part of the Confidential Information so disclosed; or
(d) was developed by the Receiving Party independently without breach of this agreement.
4. RETURN OF PROPERTY.
- (a) return all Confidential Information to the Disclosing Party; and
- (b) destroy all Derivative Material and within
days of this destruction, provide a written certificate to the Disclosing Party confirming this destruction.
6. OWNERSHIP RIGHTS.
Each party acknowledges that the Confidential Information is, and at all times will be, the Disclosing Party's sole property, even if suggestions made by a Receiving Party are incorporated into the Confidential Information. Neither party obtains any rights, by license or otherwise, in the other party's Confidential Information. Neither party solicits any change in the other party's organization, business practice, service, or products, and the disclosure of the Confidential Information may not be construed as evidencing any intent by a party to purchase any products or services of the other party or as an encouragement to expend funds in development or research efforts. The Confidential Information may pertain to prospective or unannounced products. Neither party may use the other party's Confidential Information as a basis on which to develop or have a third party develop a competing or similar plan or undertaking.
8. NO OBLIGATION.
Nothing in this agreement obligates either party to proceed with any transaction between them, and each party reserves the right, in its sole discretion, to terminate the discussions contemplated by this agreement concerning the business opportunity, if any, and to cease further disclosures, communications, or other activities under this agreement on written notice to the other party. Any commitment to proceed with a transaction will be set forth in a separate agreement signed by the parties.
9. NO WARRANTY.
ALL CONFIDENTIAL INFORMATION IS PROVIDED "AS IS." NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS, IMPLIED, OR OTHERWISE, REGARDING THE ACCURACY, COMPLETENESS, OR PERFORMANCE OF ANY SUCH INFORMATION.
- (a) Choice of Law. The laws of the state of
govern this agreement (without giving effect to its conflicts of law principles). - (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in
County, . - (c) Equitable Relief. The parties acknowledge that a breach of this agreement will cause irreparable harm to the Disclosing Party and monetary damages may not be a sufficient remedy for an unauthorized disclosure of the Confidential Information. If a Receiving Party discloses the Confidential Information in violation of this agreement, a Disclosing Party may, without waiving any other rights or remedies and without posting a bond or other security, seek an injunction, specific performance, or other equitable remedy to prevent competition or further disclosure, and may pursue other legal remedies.
11. AMENDMENTS.
No amendment to this agreement will be effective unless it is in writing and signed by a party.
12. ASSIGNMENT AND DELEGATION.
- (a) No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party
- (b) No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
- (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.
13. COUNTERPARTS; ELECTRONIC SIGNATURES.
- (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
14. SEVERABILITY.
If any provision in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if the invalid, illegal, or unenforceable provisions had never been contained in this agreement, unless the deletion of those provisions would result in such a material change that would cause completion of the transactions contemplated by this agreement to be unreasonable.
15. NOTICES.
- (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), or email.
- (b) Addresses. A party shall address notices under this section to a party at the following addresses:
- If to
: , - If to
: , - (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
16. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
17. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement with respect to the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
18. HEADINGS.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
19. EFFECTIVENESS.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
20. NECESSARY ACTS; FURTHER ASSURANCES.
Each party and its officers and directors shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
| Date:_______________________________________ | By:____________________________________________________________ |
| Date:_______________________________________ | By:____________________________________________________________ |
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Mutual non-disclosure agreement: How-to guide
Non-disclosure agreements (also called an NDA or confidentiality agreement) have become increasingly important for businesses of all sizes, serving as the first line of defense in protecting company inventions, intellectual property, trade secrets, and hard work.
These agreements are critical not only when confidential information has been wrongly disclosed but also when such disclosures haven't yet occurred.
Understanding the nuances of non-disclosure agreements
At their core, non-disclosure agreements build relationships of trust between two or more parties. The agreements contemplate situations in which at least one party shares confidential and proprietary information with the other and protects the immediate and future security of the disclosed information.
Once signed, a non-disclosure agreement allows for open dialogue between parties, creating an environment in which information can be discussed freely and the true objectives of the meeting or relationship can be met (e.g., a company can be funded, a strategic partnership can be established, etc.).
There are two key types of non-disclosure agreements: unilateral NDA and mutual NDA. Unilateral non-disclosure agreements should be used when only one party will be disclosing confidential information. For instance, when you seek funding or investment for your company, you must share your business plans, projected profits, and marketing strategies. On the other hand, a mutual non-disclosure agreement should be used when each side will be sharing confidential information. For example, when the parties are considering creating a partnership or are likely to engage in a potential business transaction.
Reasonable measures to be taken while disclosing confidential information
Creating a non-disclosure agreement is the first of many steps in maintaining and protecting confidential information. Protecting proprietary information should be the rule and not the exception. Get in the habit of using a non-disclosure agreement any time there is a possibility that the involved parties need to disclose confidential information.
The following tips will provide additional guidance in safeguarding your company's trade secrets, business plans, and other such confidential information:
1. Educate employees on the importance of NDA
Instruct all company employees about the importance, security, and protection of confidential information. Wrongful disclosure can happen at any level of your organization.
2. Don’t hold back
Many business owners hesitate to use non-disclosure agreements, fearing they imply suspicion of or doubt about the other party. This is a mistake. Non-disclosure agreements are common in modern businesses; most people won’t blink if asked to sign one. Don’t rely on oral promises of confidentiality. They're hard to prove and are harder to enforce. If someone does object, ask yourself if you truly want to be in business with that person.
3. Create and keep NDA copies
Make at least two copies of the signed agreement, one for you and the second for the other party.
4. Keep it safe
Keep the signed non-disclosure agreement in a safe place. An executed agreement is useless if it goes missing or lost.
5. Add “confidential” on the NDA document
In addition to using a non-disclosure agreement, write “confidential” on documents that require confidential treatment. This will remind the respective representatives of the nature of the document they're dealing with and their obligation to protect it.
Important elements of a mutual non-disclosure agreement
The following instructions will help you understand the terms of your mutual non-disclosure agreement.
1. Introduction of the parties
Mention the details of the parties involved in the agreement. Clearly state the names and addresses of the disclosing and receiving parties. You also need to mention the effective date when the agreement will be considered valid.
2. Purpose
Identifies the specific purpose for which the confidential information is being disclosed. By identifying the agreement’s purpose, the parties agree that any information provided will be used only to achieve authorized objectives. Note that because this is a “mutual” non-disclosure agreement, multiple parties are disclosing information. Thus, either party can be a “disclosing party” or a “receiving party,” depending on the occasion. Don’t get hung up on labels; both parties are subject to the same rules. If confidential information will be provided by one party only, use a unilateral nondisclosure agreement.
3. Confidential information
Defines what constitutes “confidential information” so that parties understand their nature and can treat such information accordingly.
- Recipient’s treatment of confidential information: Explains how a recipient will treat the confidential information. Here you need to note two important details:
- A recipient can use the information only for purposes intended by the agreement (e.g., if the information was disclosed to determine whether to enter into a joint partnership, the information can be used only for that purpose); and
- A recipient can only give the information to certain individuals in their organization.
- Tangible form of confidential information: Indicates how a recipient must handle physical representations of confidential information (e.g., drawings, disks, or reports, and not conversations or presentations).
- Exceptions: These are listed exceptions to the general rules in a mutual NDA. This section details four situations in which a party’s disclosure of “confidential information” doesn't violate the agreement.
- First: If the “confidential information” has already been made public by someone other than the receiving party.
- Second: If the “confidential information” had been provided to the receiving party in a non-confidential manner previously. In other words, the information was provided to the receiving party before they signed the agreement, during which time the information either wasn’t considered confidential or was provided in a manner suggesting it wasn’t confidential.
- Third: If the receiving party is legally compelled to provide confidential information. If this is the case, however, the receiving party must alert the disclosing party immediately so that it may limit potential damage.
- Fourth: If the receiving party independently developed the confidential information without breaching the agreement. In other words, the receiving party generated the same information without reference to protected data. This section is included because many financiers, investors, and business owners will require it.
4. Term
This section mentions the time period a receiving party must treat the confidential information.
5. No license
Restate that the confidential information is being communicated for a specific business purpose only. In other words, the receiving party doesn't receive any ownership rights to the information through this agreement.
6. No publicity
This part indicates that the parties will keep their dealings confidential. This is typically used for joint ventures, acquisitions, mergers, and similar arrangements, where disclosure of the relationship could diminish the value of a company or its business.
7. Governing law and equitable relief
Allows the parties to choose the state laws that will be used to interpret the agreement. The provision also allows the parties to seek equitable relief (i.e., court remedies requiring a party to perform or refrain from performing certain acts) for any violation of the agreement.
8. Entire agreement
The parties only agree to the terms and conditions mentioned in their specific mutual NDA and not to any previous agreements or promises. If any change is required, it must be in writing and signed by the duly authorized representative.
9. No assignment
Indicates that no party can assign or transfer their obligations under the agreement to a third party.
10. Severability
Protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law provisions, it won't undo the entire agreement. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the agreement enforceable.
11. Notices
Lists the addresses to which all official or legal correspondence will be delivered.
12. No implied waiver
This explains that if the disclosing party ignores or allows the receiving party to break an obligation related to the confidential information, it doesn't mean the disclosing party waives future rights to enforce the same obligations.
13. Headings
It states that the headings at the beginning of each section are meant to organize the document and shouldn't be considered operational parts of the agreement.
Note: Although the protection of your business starts with a well-crafted non-disclosure agreement, it doesn’t end there. Be vigilant in protecting your intellectual property and deal intelligently with your employees, business partners, and customers. It takes only one disclosure to alter the landscape of your business permanently.
If you haven't understood the sections mentioned above, you can always rely on an online mutual NDA template to get started. Use LegalZoom's NDA templates and create agreements based on your business needs.
You can get LegalZoom’s simple agreement form format at an affordable price. To create your agreement, all you have to do is fill out the document with the help of guided questions. You can easily add or edit certain critical clauses and sections using our rich editor. You can download your document as a .pdf file when it is ready.
Frequently asked questions
What's a mutual non-disclosure agreement?
A mutual non-disclosure agreement, or a confidentiality agreement, is your first line of defense in protecting confidential company information such as customer data, inventions, and trade secrets. Having an NDA with your business associates clarifies what's confidential to help prevent accidental information leaks about proprietary information, technology, intellectual property, and much more.
NDAs clarify what everyone should keep confidential among colleagues, which helps prevent trade and other business secrets from falling into competitors' hands.
What information should be kept ready to fill out a mutual NDA?
While preparing a mutual NDA document, you should know some basic information like:
- The details of the disclosing party, receiving party, and any other third person involved in the agreement.
- What kind of project or arrangement are you involved in with the other party?
- Timelines for when the agreement will take effect and how long the information received as part of the arrangement should be kept confidential.
Free Mutual Non-disclosure Agreement Template
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