A Nevada NDA , or “nondisclosure agreement,” is a legal agreement between two or more parties outlining information that must remain confidential. Startups and businesses commonly use NDAs to safeguard themselves in situations where employees or potential business partners may attempt to reveal the company's confidential details. NDAs help protect vital assets, such as trade secrets, company strategies, or client contact lists, from being shared with the public or competitors.
(a) Means information, including, without limitation, a formula, pattern, compilation, program, device, method, technique, product, system, process, design, prototype, procedure, computer programming instruction or code that:
(1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other persons who can obtain commercial or economic value from its disclosure or use; and
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
(b) Does not include any information that a manufacturer is required to report pursuant to NRS 439B.635 or 439B.640, information that a pharmaceutical sales representative is required to report pursuant to NRS 439B.660 or information that a pharmacy benefit manager is required to report pursuant to NRS 439B.645, to the extent that such information is required to be disclosed by those sections. (Nevada Uniform Trade Secrets Act NRS 600A.030(5))
Read on to learn more about Nevada NDAs, including:
Here are some key components that are typically included in a Nevada Nondisclosure Agreement:
In the context of NDAs, the party presenting the confidential data is known as the 'disclosing party,' while the one accepting the information is the 'receiving party.' This terminology is primarily relevant for unilateral NDAs. For mutual NDAs, both sides play both roles. Make sure you discern between a 'Company Name' and an 'individual.' If you as an individual are either disclosing or getting the information, use your name if you don't have a company.
This nondisclosure agreement (this “Agreement”) is dated [ Date ] (the “Effective Date”) and is between [ Company Name of Disclosing Party; e.g. “Max Studios, LLC”; if you do not have a formal legal entity, use your legal name, e.g. “Max Smith” ], (the “Company”), and [ Company Name of Receiving Party; if receiving party does not have a formal legal entity, use their legal name ] (the “Recipient”).
In an NDA, you need to specify what you consider as 'confidential information.' The rationale behind this is understandable - imagine a situation where an employer asserts, 'Every piece of information I communicate to you in the next 24 months is confidential.' Fast forward to a year later, and as you're planning to resign, your employer mentions that rain might be on the horizon tomorrow. That evening, you happen to tell a common acquaintance about the likely rainfall. Were you breaching confidentiality? Hopefully not!
A court would never validate such a broad confidentiality commitment. However, if the definition is excessively restricted, you might unintentionally disclose confidential details that the receiving party could then circulate freely.
Most enterprises use a customary definition, like the one present in the template. If you're uncertain, consider reviewing our comprehensive guide about defining confidential information in your NDA.
“Confidential Information” means any information that is proprietary or unique to the Company and that is disclosed by the Company to the Recipient during the term of this Agreement, including the following: trade secret information; matters of a technical nature such as processes, devices, techniques, data and formulas, research subjects and results; marketing methods; plans and strategies; information about operations, products, services, revenues, expenses, profits, sales, key personnel, customers, suppliers, and pricing policies; and any information concerning the marketing and other business affairs and methods of the Company which is not readily available to the public. “Confidential Information” also includes information of others that (1) is disclosed under this Agreement, (2) the Company is obligated to protect from disclosure or restricted from using or both, and (3) that would constitute “Confidential Information” if the information belonged to the Company.
Every NDA, including the template, obliges you to detail the 'purpose' of the agreement. This could be something like 'to manufacture a prototype for the disclosing party,' or 'to evaluate the potential of a business collaboration between both parties.' The significance of the purpose is that it stipulates how the recipient might employ the confidential details.
For instance, suppose you wish to employ a developer to build your website. You share your business plans with them to give them a better comprehension of the website's nature. In that case, you'd want to narrow the purpose to be associated with the 'development of. ' and then specify the aspects of the website that the developer will be working on.
Without the limitation set by this purpose, the developer might use the confidential information to start a similar, separate business and benefit from the original business's confidential info.
In most circumstances, the wording in the template ('exploring the capacity of both parties to pursue one or more business potentials') is adequate. Please see a generic purpose statement.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
How you utilize your confidential data is related to why you're signing an NDA. This provision essentially conveys that you'll apply the confidential data only for the purpose stated. This might seem apparent, but consider a situation where a person is exploiting the confidential details to the detriment of the company. This provision assures that sensitive discussions remain discreet, shielding both parties from potential harm or outside influence.
The Recipient shall use Confidential Information only for the Purpose. Unless otherwise agreed in writing, neither party shall disclose to a third party the fact that discussions or negotiations are taking place concerning the Purpose or any of the terms or other facts relating to the Purpose, including the status of negotiations between the parties.
Suppose you're giving your information to the 'Recipient.' What if the Recipient turns out to be an actual company? Or, what if the recipient needs to consult a lawyer about some information? The 'Limited Access' segment of your NDA addresses these questions.
In general, the wording in the template is sufficient. However, it's worth noting who needs to be privy to the information and restrict its use accordingly. Whoever the recipient passes the data onto should ensure that individual signs an NDA that agrees to the same terms.
The Recipient shall protect the Confidential Information from unauthorized use and disclosure using the same degree of care that it uses with respect to its own information of like importance, but no less than a reasonable degree of care. The Recipient shall retain the Confidential Information in confidence and shall not disclose Confidential Information to any third party without the Company’s prior written consent. However, the Recipient may disclose the Confidential Information to employees, contractors, consultants, and authorized representatives of the Recipient who (1) require access to the information for the Purpose, (2) are informed by the Recipient of the Recipient’s obligations under this Agreement, and (3) are bound by contract or fiduciary duty to obligations of confidentiality and use restrictions with substantially similar function, purpose, scope, and effect to those of this Agreement and that are at least as protective of the Confidential Information as this Agreement.
In an NDA, there's a part that highlights 'exclusions.' These are important to warrant that your NDA is legally valid and enforceable (should such need arise). You might consider removing clause 4(a)(1), but only if you've already disclosed confidential information to the receiver. As a general rule, the exclusions listed in the template should work in most situations.
(a) This Agreement imposes no obligations upon the Recipient with respect to Confidential Information that: (1) was known to the Recipient before disclosure by the Company as evidenced by contemporaneous records; (2) has become publicly available through no fault of the Recipient; (3) is disclosed to the Recipient by a third party that has the right to make the disclosure to the Recipient and that does not have any obligation of confidentiality with respect to the Confidential Information; or (4) is disclosed by the Recipient with the Company’s prior written consent.
(b) If the Recipient is required by any governmental agency, court, or other judicial or regulatory body to provide any Confidential Information received under this Agreement, then the Recipient will not be deemed to be in violation of this Agreement for the disclosure if the Recipient promptly gives written notice to the Company of the requirement to provide the Confidential Information and cooperates with the Company so that the Company may contest the requirement to provide the Confidential Information. The Recipient may disclose only that portion of the Confidential Information that it is legally required to furnish.
While drafting your NDA, you'll come across a part that covers the 'term,' meaning the duration, for which the NDA holds valid. Your NDA could cover a single transaction that might just last a few days, or you might want it to be in force indefinitely. Essentially, the time frame should cover the scope of your expected interaction. Often, you'll find that the NDA lasts longer than the specific transaction or relationship.
Key Point: You might want a clause in your NDA that specifies confidentiality must be maintained even after a business relationship or contractual agreement concludes. If you're in a quandary about what to include, remember that an average NDA lasts between one to five years. Of course, the term should be as long - as the information needs to remain confidential.
This Agreement will continue for a period of one year from the Effective Date unless: (1) terminated earlier by either party upon written notice to the other; (2) extended by the mutual written agreement of the parties; or (3) superseded by a subsequent written agreement that explicitly sets forth the obligations of the parties with respect to Confidential Information. With respect to business information, the Recipient’s obligations of confidentiality and non-use under this Agreement will expire three years from the termination of this Agreement. With respect to all information that constitutes a trade secret, the Recipient’s obligations of confidentiality and non-use under this Agreement will survive the termination of this Agreement for as long as such information remains a trade secret under applicable law.
Don't worry if you've ended up accidentally disclosing confidential information to the other party already! It's not a catastrophe, and we've got your back. There are ways to modify the template to adapt to such scenarios. Here's how you can do it.
An NDA's primary role is to safeguard your confidential information. But confidentiality alone doesn't amount to much. To be of any value, the information should qualify as a Trade Secret. If you're unsure about what a trade secret is, how to ascertain if the information qualifies as one, or how to protect your trade secret properly, please refer to our comprehensive guide on the subject.
