How to draft a simple confidentiality agreement (with template)

Confidentiality agreements (also known as non-disclosure agreements or NDAs) aim to

protect information disclosed by the disclosing party by requiring the recipient to keep it
secret. NDAs have their limitations and can be very difficult to enforce but despite this it
is far better to have one in place than not. If highly sensitive information is to be
disclosed, the disclosing party may wish to consider taking specific security precautions
(e.g. by providing the information only in a data room).

The template to which this note relates is a relatively simple document intended to be
used where one party wishes to disclose confidential information to the other party in the
context of a possible deal between the parties; depending on how sensitive / valuable
the confidential information to be disclosed is a more detailed document may sometimes
be required. You will find the template at the end of this note.

The NDA should be entered into before any information is disclosed in order to avoid
subsequent disputes over whether the information is covered by the agreement or not.

The standard document assumes that the parties are only concerned to protect the
detailed commercial information provided to the recipient. The words in italics in
paragraph 1 give some examples of the type of confidential information which is often
sought to be protected but this may need tailoring to specific situations. Furthermore,
paragraph 1 will need to be amended if the parties wish the existence of the negotiations
and/or the NDA to be confidential.

The parties should consider setting a finite period for the duration of the NDA in
paragraph 3.1 that reflects how long the disclosed information will retain its commercial
value. Business information often loses its value after two or three years, either because
it has become part of the public domain, or because it has become out of date.
Technical information, such as a patent or a secret formula, is capable of remaining
valuable almost indefinitely. The courts will not uphold the confidentiality undertaking

once the information has lost its commercial value, so there is little to be gained in
setting an artificially long duration.

The recipient should consider whether it needs to disclose the protected material to
anyone else (e.g. group companies) and amend the NDA accordingly.

It is important to restrict the way the protected material may be used. The template NDA
only restricts the disclosure of protected material and the disclosing party will sometimes
additionally seek to prevent the recipient using it to compete with the disclosing party;
however, recipients will often resist this or at least seek to make any such undertaking
extremely narrow and specific in its terms.

The remainder of the template sets out some fairly common restrictions and limitations.
Paragraph 4.3 is a little more unusual in that it seeks to prevent the recipient from
poaching the disclosing parties staff. This may not be appropriate or indeed
acceptable in some situations and if the principle is agreed the recipient may wish to
include some limitations (e.g. that it is not in breach if the disclosing parties employees
respond to a general job advertisement published by the recipient and not targeted at
the disclosing parties employees).

For further information on confidentiality agreements or for assistance with drafting an

NDA, please contact David James davidj@moorheadjames.com

The information in this note has been prepared by Moorhead James LLP for general guidance only and
does not constitute advice on any specific matter. We recommend that you seek professional advice
before taking any action. We cannot accept liability for any action taken or not taken as a result of this
information. Moorhead James LLP 2014

TEMPLATE
DRAFT CONFIDENTIALITY AGREEMENT (NDA) FOR STRAIGHTFORWARD SITUATIONS
(NON-MUTUAL CONFIDENTIALITY OBLIGATIONS)

[to be printed on letterhead of party which is disclosing confidential information]

[date] 201*

[name and address of person receiving confidential information]

Dear Sirs,
We are writing further to your expression of interest regarding [describe in general terms nature of
proposed transaction] (the Potential Transaction). In consideration of [name of disclosing entity]
[and its subsidiaries and / or other group companies] ([short name of disclosing entity], we, us
our) providing information to you in relation to the Potential Transaction, you undertake to us
(both for our own benefit and that of our shareholders) as follows:
1.

KEEPING CONFIDENTIAL INFORMATION CONFIDENTIAL

You will keep any Confidential Information (which expression means any information
disclosed (whether in writing, electronically, verbally or by any other means, whether prior
to, at the time of or subsequent to the signing of this letter and whether disclosed directly or
indirectly) by us or by a third party on our behalf to you including, without limitation,
[intellectual property rights, management accounts and other accounting information,
financial projections, any information relating to our financing, customers, prices,
specifications, technical data, volumes, operations, plans or intentions, know-how, trade
secrets, market opportunities and business affairs)] confidential and not disclose it to any
other person other than your professional advisers and senior employees who are under an
obligation of confidentiality. In particular, you will exercise no lesser security measures and
degree of care than those which you apply to your own confidential information (and which
you warrant as providing adequate protection against any unauthorised disclosure, copying
or use). For the avoidance of doubt, Confidential Information does not need to be marked
confidential or similar for it to be subject to this letter.

2.

USE OF CONFIDENTIAL INFORMATION

2.1

You undertake not to use the Confidential Information for any purpose other than the
Potential Transaction.

2.2

The restrictions on use and disclosure set out in paragraph 1 above shall not apply to
any information which is required to be disclosed by applicable law or by order of a court
of competent jurisdiction provided that prior to such disclosure we will each consult with
the other as to the proposed form, nature and purpose of the disclosure.

3.

DURATION

3.1

You agree that the above undertakings shall last until the relevant Confidential Information

comes into the public domain other than as a result of a breach of the terms of this letter by
you but shall otherwise be of indefinite duration.
3.2

You undertake within 2 days of a written request from us to return to us or destroy (as we
shall direct) all documents and other material (including electronic data) in your possession,
custody or control that bear or incorporate any of the Confidential Information.

4.

FURTHER AGREEMENTS
You further agree that:-

4.1

No right or licence is granted to you in relation to any of the Confidential Information other
than as expressly set out in this Agreement.

4.2

We accept no responsibility for and make no representations or warranties, express or

implied, with respect to the accuracy or completeness of any of the Confidential Information
and we shall not be liable to you or any third party for any loss resulting from use of the
Confidential Information.

4.3

You shall not during the course of the Potential Transaction and for a period of 1 year
after the Potential Transaction ends solicit for employment or the provision of services
any of our current employees or consultants while they continue to be employed by or
contracted to us, unless we provide prior written consent to such solicitation

4.4

No failure or delay by us in exercising any right or power under this undertaking shall
operate as a waiver of that right or power and no single or partial exercise of that right or
power shall preclude any other or further exercise of that right or power or the exercise of
any other right or power.

4.5

Damages would not be an adequate remedy for any breach of your undertakings and we
shall be entitled to the remedies of injunction, specific performance and other equitable
relief for any threatened or actual breach of your undertakings and no proof of special
damages shall be necessary for the enforcement of your undertakings.

4.6

This letter shall be governed by and construed in accordance with the laws of England and
the parties submit to the exclusive jurisdiction of the High Court in London (without
prejudice to our rights to enforce any judgment in any other jurisdiction which are hereby
reserved).

Please indicate your acceptance of this letter and the undertakings contained in it by countersigning this letter and returning it to us.
Yours faithfully,

[name]
For and on behalf of [short name of disclosing entity]
Agreed and accepted

..........................................................
Duly authorised for and on behalf of
[name of addressee]

Dated : ..........................................201*