A non disclosure agreement time period is the amount of time for which nondisclosure is legally required, according to the agreement terms. Nondisclosure agreements (NDAs) are also called confidentiality clauses, confidentiality statements, confidential disclosure agreements (CDAs), or confidentiality agreements (CAs). In simple terms, a nondisclosure agreement legally requires a party to keep a secret. It is a legally enforceable contract that establishes a relationship of confidentiality between a party holding a trade secret and a party to whom the secret will be told. It provides a crucial legal framework intended to protect confidential information from being disclosed by the recipient.

NDAs are common in the business world, as they present one of the most certain ways to legally protect trade secrets and other private or confidential information. Such information may include technical details of a new product, a particular manufacturing process, client information, marketing and sales plans, or other sensitive information. If you use an NDA, your information will remain confidential, and if it doesn't, you'll be able to take legal action against the guilty party.

What Information Is Not Considered Confidential?

There are certain things that are not legally considered confidential. A nondisclosure agreement cannot prohibit a party from disclosing any of the following:

  • Information already known within the industry.
  • Information that becomes public knowledge through no fault of the purchaser.
  • Information rightfully in the purchaser's possession before the signing of the contract.
  • Information generated by the purchaser through their own research, which must be obtained without the use of secret information received from the seller. Information may be gained from industry sources or public sources.
  • Information acquired from a third party where such a party is legally allowed to disclose the information, including that disclosed by an industry journal or government agency.
  • Public records, including information documented with the SEC.

How Long Should the Nondisclosure Time Period Be?

When determining the nondisclosure time period of an NDA, consider the length of time that will be long enough to protect the interests of the disclosing seller, while not placing an unreasonable burden on the receiving purchaser. Make sure to consider the rate of technological changes within the industry.

If you are the party disclosing information, you'll want to make sure your sensitive information is kept confidential and without risk of unauthorized disclosures. This likely means you'll want to protect that privacy for as long as reasonably possible.

If you are the party receiving the disclosure, you'll want to avoid taking on too many obligations within the agreement. It would be wise to limit the amount of information kept confidential and the amount of time that it must be kept confidential.

If there is no time period included within an NDA, it is implied that the NDA will be valid indefinitely.

Types of Nondisclosure Agreements

There are different types of nondisclosure agreements, which provide different limitations regarding confidentiality and the agreement's time period. A unilateral agreement, also referred to as a one-way NDA, is an agreement that requires that only one party maintain confidentiality. Businesses often use these contracts with their employees to prevent them from revealing job-related confidential information. Most NDAs are unilateral agreements.

Professors at research universities and corporate and contract researchers in private companies may be required to sign unilateral NDAs that hand over any research rights to the business or university that employs them. Another example would be if a private equity company approached you and you required them to sign a unilateral NDA. This would protect any sensitive information that you disclosed to them, but you would not be required to keep their disclosed information confidential. In other words, a unilateral NDA protects your information, but not that of the other party.

Another type of NDA is a mutual NDA, which is often established between two or more companies participating in a joint venture that includes sharing proprietary information. For example, if an audio speaker manufacturer has information about the top-secret technology going into a new car, they might need to keep the car design confidential. On the other hand, the car designer might need to keep the new audio technology confidential as well.

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