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A confidentiality or non-disclosure agreement (NDA) is a legally binding document setting forth the conditions under which proprietary information is offered and received between the parties (Disclosing and Receiving party accordingly). The agreement provides protection of intellectual property for an inventor or any other party who needs to disclose the information from a third party.
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This page describes the most important elements of a non-disclosure contract.
Definition of Confidential Information
The most important part of the confidentiality agreement is the definition of Confidential Information. Ideally, the contract should set forth as specifically as possible the scope of information covered by the agreement. Confidential information would normally include all tangible materials (documents, computer disks, tapes), commercial and personal secrets, software and hardware products, technical data and much more.
Exclusions from Confidential Information
Practically every non-disclosure or confidentiality agreement puts some limits on the type of information that will be deemed confidential. For instance, if the Receiving party already knew the information before it was revealed by the Disclosing party, or it becomes publicly available without the Receiving party breach of any obligations, if the information was revealed to the Receiving party by a third party, etc. Such information will not be treated as confidential under the agreement.
This provision states that in return for agreeing to keep the information confidential, the Receiving party has the right to receive the information. The Disclosing party should disclose its confidential information to the Receiving party.
Non-disclosure and Non-use
The Receiving party must agree not to disclose the information to third parties. This provision states the term for the information to remain confident. The Receiving party should take reasonable precautions to protect the information and does not use the information for any purpose other than that set forth in the agreement.
Rights and Remedies
The Receiving party has to notify the Disclosing party upon discovery of any unauthorized use or disclosure of the confidential information. The Disclosing party can take certain steps to review the Receiving party compliance with the terms of the agreement.
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