NDA’s should be tailored to the situation, covering only what needs to be covered, and doing so clearly. The most important issue to consider when drafting an NDA is to make sure that the agreement would be enforceable by a court. The quickest way to unenforceability is to write the terms of the NDA too broadly. When written without reasonable application to the situation at hand, courts will consider the NDA to be more like a non-compete provision and then more likely to consider the agreement unenforceable.
To keep an NDA from being considered “too broad,” the scope of coverage must not be so overreaching that it impedes on the other party’s ability to accomplish its original objective. Conversely, the provision must not be written so vaguely that a court would consider it unenforceable because it does not put the other party on notice of what types of activities are actually barred by the agreement. The types of information usually covered in the scope of the agreement are business strategies, inside studies and analyses, and certain unenumerated materials that have been marked as “confidential” or “proprietary.” In addition to making sure that the confidential information covered is actually confidential, parties must make efforts to keep the information confidential. Simply, if information becomes public knowledge, it can’t be protected by an NDA.
Additionally, an NDA should include reasonable time limitations and should usually allow disclosure in certain limited circumstances, such as with a judicial order. This disclosure term should be supplemented with a procedure on notification to the other party. Often NDAs include a term providing for the return or destruction of information at the end of the relationship and a term providing for injunctive relief in case one party breaches the agreement. Lastly, agreements that require a large entity to comply with an NDA should provide for additional obligations requiring the large entity to have procedures in place to make sure employees are aware of the confidential nature of information covered by the agreement.
Remember. Tailor the NDA to the specific need. Don’t require secrecy on everything (don’t be too broad) and make sure to identify exactly what should be kept secret (don’t be too vague).
For more check out part one of our two-part series on NDAs: Do We Need a Confidentiality Agreement?