A non-disclosure agreement (NDA or in the plural NDAs) is a legal document used to ensure that certain information and intellectual property will remain confidential, playing a crucial role in business negotiations by protecting classified information, as agreed between the parties. This document can be signed by two or more parties, including (i) legal entities; (ii) individuals; or (iii) both of them.
This legal document, once signed by both parties, is of great assistance to create trust and reassurance among them by outlining the terms and conditions under which sensitive information can be shared and used, even after the end of the contractual term that gave rise to it.
We are currently observing a significant increase in new proposals and technological advancements by various entities, including industries, corporations, and startups, resulting in a market that is under constant renewal and growth.
To facilitate such initiatives, it is customary to seek collaborations with investors and foreign companies to drive project development, even though these collaborators may eventually become direct competitors in the future, or share information with the market. In this regard, it is mandatory for these entities to seek legal security for their commercial transactions through an NDA.
There is no single standard for an NDA to be considered effective, as its content will depend on the business relationship it aims to safeguard. Often, engagements with foreign companies involve collaborations on research, development, or production projects, establishing a new business relationship. However, data protection and intellectual property laws may vary from country to country, as the legislation governing companies may vary. A well-crafted NDA can help mitigate legal risks associated with disclosing confidential information to foreign companies, clearly outlining expectations and necessary protective measures.
A properly drafted NDA provides more than just legal security for the business relationship; it ensures that these relationships actually materialize and, more than that, it allows this materialization in the form of a document that legally safeguards the parties from the perspective of both legislations, considering that its terms and conditions are freely agreed upon before the effective signing. In its most general form, the following clauses are extremely important for an efficient NDA:
- Detailed description of what is considered confidential information to the parties;
- Making it clear who is involved in the NDA;
- Specifying the duration of confidentiality;
- Clarifying the jurisdiction and the process for resolving disputes;
- Some exceptions to confidentiality, such as information already in the public domain or disclosed with the consent of the disclosing party; and
- Defining consequences in case of an NDA breach.
In addition, in some cases, depending on the parties involved and the transaction to be carried out, the NDA can be drawn up based on the rules and procedures of the ICC (International Chamber of Commerce), in order to bring standardization and uniformity to the document, as the ICC publishes a set of guidelines governing various aspects of international commercial transactions, playing a crucial role in facilitating these relationships, mitigating risks, resolving disputes and promoting trust and credibility in global transactions.
Thus, an NDA is an essential document to contract foreign companies, compiling mutual interests of the parties in order to form a document that helps them safeguard commercial interests and foster secure and productive business relationships in a globalized and highly competitive environment. To achieve this, it is crucial to always seek the support of specialized legal counsel and a diverse team of professionals with proven experience in drafting non-disclosure agreement for commercial relationships with foreign companies.