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What should be included in a non-disclosure agreement?
Introduction
A Non-Disclosure Agreement (NDA) is a legal contract between two or more parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes but wish to restrict from wider dissemination. In Kenya, NDAs are commonly used in various business transactions to protect sensitive information such as trade secrets, business plans, or other proprietary information from being disclosed to unauthorized parties. This document is crucial for maintaining the confidentiality of information and ensuring that it is not misused.
Table of Contents
Definition and Purpose of an NDA
Types of NDAs
Key Clauses in an NDA
Definition of Confidential Information
Obligations of the Receiving Party
Duration of the Agreement
Exclusions from Confidential Information
Permitted Disclosures
Return or Destruction of Information
Remedies for Breach
Governing Law and Jurisdiction
Legal Precedents and Case Laws
Conclusion
TLDR
1. Definition and Purpose of an NDA
An NDA is a legally binding contract that establishes a confidential relationship between the parties involved. The primary purpose of an NDA is to protect sensitive information from being disclosed to unauthorized parties. This is particularly important in business transactions where proprietary information, trade secrets, or other confidential data are shared.
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2. Types of NDAs
There are generally two types of NDAs:
Unilateral NDA: This type of NDA involves two parties where only one party discloses confidential information to the other party. The receiving party is obligated to keep the information confidential.
Mutual NDA: In this type, both parties disclose confidential information to each other and are both obligated to keep the information confidential.
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3. Key Clauses in an NDA
3.1 Definition of Confidential Information
This clause specifies what constitutes confidential information. It is crucial to clearly define what information is considered confidential to avoid any ambiguity. This can include business plans, financial records, customer lists, trade secrets, and other proprietary information.
3.2 Obligations of the Receiving Party
This clause outlines the responsibilities of the receiving party regarding the handling of confidential information. It typically includes:
Not disclosing the information to third parties.
Using the information only for the intended purpose.
Taking reasonable steps to protect the confidentiality of the information.
3.3 Duration of the Agreement
The duration clause specifies the period during which the NDA will be in effect. This can vary depending on the nature of the information and the relationship between the parties. Some NDAs may have a fixed term, while others may remain in effect indefinitely.
3.4 Exclusions from Confidential Information
This clause outlines what information is not considered confidential. Common exclusions include:
Information that is already public knowledge.
Information that was known to the receiving party before disclosure.
Information that is independently developed by the receiving party without using the disclosing party's confidential information.
3.5 Permitted Disclosures
This clause specifies the circumstances under which the receiving party is allowed to disclose the confidential information. This can include disclosures required by law or disclosures to employees or contractors who need to know the information for the intended purpose.
3.6 Return or Destruction of Information
This clause outlines the obligations of the receiving party to return or destroy the confidential information upon termination of the agreement or upon request by the disclosing party.
3.7 Remedies for Breach
This clause specifies the remedies available to the disclosing party in case of a breach of the NDA. This can include injunctive relief, damages, or other legal remedies.
3.8 Governing Law and Jurisdiction
This clause specifies the governing law and jurisdiction that will apply to the NDA. In Kenya, it is common to specify that the agreement will be governed by Kenyan law and that any disputes will be resolved in Kenyan courts.
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4. Legal Precedents and Case Laws
Case Law 1: Kenya: High Court Determines the Right to Access to Information
In a recent judgment, the High Court of Kenya determined the scope of the constitutional right to access information under Article 35 (1) and the ability of parties to rely on contractual non-disclosure clauses in refusing to grant access to information sought by third parties. This case highlights the importance of clearly defining the scope and limitations of NDAs in protecting confidential information.
Relevance: This case underscores the legal enforceability of NDAs in Kenya and the importance of drafting clear and comprehensive agreements.
Source: Bowmans ↗
Case Law 2: Succession Cause No. 423/2012
In this case, the court held that even though the applicant knew that the respondent did not have the authority to sell shares because he was not yet an administrator of the deceased’s estate, the applicant did not stop there. This case illustrates the importance of ensuring that all parties to an NDA have the necessary authority to enter into the agreement.
Relevance: This case highlights the importance of verifying the authority of parties entering into an NDA to ensure its enforceability.
Source: Kenya Law ↗
Case Law 3: Criminal Revision E123 of 2024
In determining whether to impose a custodial or non-custodial sentence, the court is required to take into account various factors, including the gravity of the offence and the criminal history of the offender. This case is relevant in the context of NDAs as it highlights the potential legal consequences of breaching an NDA.
Relevance: This case underscores the potential legal consequences of breaching an NDA and the importance of including clear remedies for breach in the agreement.
Source: Kenya Law ↗
Conclusion
A well-drafted NDA is essential for protecting confidential information in business transactions. It is important to include key clauses such as the definition of confidential information, obligations of the receiving party, duration of the agreement, exclusions from confidential information, permitted disclosures, return or destruction of information, remedies for breach, and governing law and jurisdiction. Legal precedents in Kenya highlight the importance of clear and comprehensive NDAs and the potential legal consequences of breaching such agreements.
TLDR
A Non-Disclosure Agreement (NDA) in Kenya should include key clauses such as the definition of confidential information, obligations of the receiving party, duration of the agreement, exclusions from confidential information, permitted disclosures, return or destruction of information, remedies for breach, and governing law and jurisdiction. Legal precedents underscore the importance of clear and comprehensive NDAs and the potential legal consequences of breaching such agreements.
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Answered by mwakili.com