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What should be included in a non-disclosure agreement?

A non-disclosure agreement (NDA) is a legally binding contract between two or more parties that outlines the confidential information they will share with each other and establishes the terms and conditions regarding the protection of that information. It is a crucial document for protecting sensitive information, such as trade secrets, business plans, or other proprietary information, from being disclosed to unauthorized parties.

Table of Contents

  1. Introduction

  2. Essential Clauses in a Non-Disclosure Agreement 2.1. Definition of Confidential Information 2.2. Obligations of the Receiving Party 2.3. Exceptions to Confidentiality 2.4. Term of Confidentiality 2.5. Remedies for Breach 2.6. Governing Law and Jurisdiction 2.7. Entire Agreement 2.8. Severability 2.9. Notices 2.10. Waiver

  3. Case Laws

  4. Conclusion

  5. TLDR

Introduction

In Kenya, NDAs are commonly used in various business transactions, including:

  • Negotiations for mergers and acquisitions: Parties may exchange confidential information about their businesses before deciding whether to proceed with a deal.

  • Licensing agreements: A licensor may disclose confidential information about its technology or intellectual property to a licensee.

  • Joint ventures: Partners in a joint venture may need to share confidential information about their businesses and operations.

  • Employment contracts: Employers may require employees to sign NDAs to protect confidential information related to their business.

  • Consultancy agreements: Consultants may be required to sign NDAs to protect confidential information they receive from their clients.

Essential Clauses in a Non-Disclosure Agreement

A well-drafted NDA should include the following essential clauses:

2.1. Definition of Confidential Information

This clause should clearly define what information is considered confidential. It should be specific and comprehensive, covering all types of information that the parties wish to protect. This could include:

  • Trade secrets: This refers to information that gives a business a competitive advantage and is not generally known to the public.

  • Business plans: This includes detailed information about a company's strategies, operations, and financial projections.

  • Financial information: This could include sales figures, profit margins, and customer data.

  • Technical information: This could include designs, formulas, and processes.

  • Marketing information: This could include customer lists, advertising campaigns, and market research data.

Source: Silvana & Associates Advocates

2.2. Obligations of the Receiving Party

This clause outlines the receiving party's obligations regarding the confidential information. It should state that the receiving party:

  • Will not disclose the confidential information to any third party without the disclosing party's written consent.

  • Will use the confidential information only for the purposes specified in the NDA.

  • Will take reasonable steps to protect the confidentiality of the information.

  • Will return all copies of the confidential information to the disclosing party upon request.

Source: Silvana & Associates Advocates

2.3. Exceptions to Confidentiality

This clause should specify any exceptions to the confidentiality obligations. This could include:

  • Information that is already publicly known.

  • Information that the receiving party lawfully obtained from a third party.

  • Information that the receiving party is required to disclose by law.

Source: Silvana & Associates Advocates

2.4. Term of Confidentiality

This clause specifies the duration of the confidentiality obligations. It should state how long the receiving party is obligated to keep the information confidential. The term can be indefinite or for a specific period.

Source: Silvana & Associates Advocates

2.5. Remedies for Breach

This clause outlines the remedies available to the disclosing party in the event of a breach of the NDA. This could include:

  • Injunctive relief: This is a court order that prohibits the receiving party from disclosing the confidential information.

  • Damages: This is a monetary award to compensate the disclosing party for any losses caused by the breach.

  • Specific performance: This is a court order that requires the receiving party to perform its obligations under the NDA.

Source: Silvana & Associates Advocates

2.6. Governing Law and Jurisdiction

This clause specifies the law that will govern the NDA and the jurisdiction where any disputes will be resolved. It is important to choose a jurisdiction that is familiar with intellectual property law and has a strong legal system.

Source: Silvana & Associates Advocates

2.7. Entire Agreement

This clause states that the NDA constitutes the entire agreement between the parties regarding the subject matter of the agreement. It prevents either party from relying on any prior or contemporaneous representations or agreements.

Source: Silvana & Associates Advocates

2.8. Severability

This clause provides that if any provision of the NDA is held to be invalid or unenforceable, the remaining provisions will remain in full force and effect.

Source: Silvana & Associates Advocates

2.9. Notices

This clause specifies how notices and other communications under the NDA will be given. It should include the addresses and contact information of the parties.

Source: Silvana & Associates Advocates

2.10. Waiver

This clause states that any waiver of a breach of the NDA must be in writing and will not be deemed a waiver of any subsequent breach.

Source: Silvana & Associates Advocates

Case Laws

Conclusion

A well-drafted NDA is essential for protecting confidential information in Kenya. It should be tailored to the specific circumstances of the transaction and should include all the essential clauses discussed above. It is advisable to seek legal advice from a qualified lawyer to ensure that the NDA is properly drafted and protects your interests.

TLDR

A non-disclosure agreement (NDA) is a legally binding contract that protects confidential information. It should clearly define the confidential information, outline the receiving party's obligations, specify exceptions to confidentiality, state the term of confidentiality, and outline remedies for breach.

Answered by mwakili.com