NDA terms

Disclosure and use

The NDA should restrict the recipient from:

disclosing information; and
using information.

If limited "use" is permitted (e.g. for evaluation or further development), define a "purpose".

If disclosure to "permitted persons" is permitted, define those persons (e.g. attorneys, auditors, directors) and clarify who is responsible for any breach of confidentiality by them.

Exclusions

Consider excluding the following information from the definition of "confidential information":

information that is in the public domain (i.e. is publicly available) at the date of signing the NDA;
information that falls into the public domain after the date of signing the NDA, otherwise than as a result of a breach of confidentiality by the recipient;
information disclosed to the recipient by a third party who is not subject to related obligations of confidentiality in favour of the discloser;
information that was in the possession of the recipient prior to the date of signing the NDA; and
information that is independently developed by the recipient without use of "confidential information".

Return of material

Consider providing for return or destruction of all material containing "confidential information" that was provided by discloser or that may have been developed by the recipient during the term of the NDA.

Term of the NDA

NDAs should have a fixed term of confidentiality. Typical terms are 3, 5 or 10 years. We don't like perpetual NDAs, unless you happen to be protecting the Coke formula.

If you intend to patent your idea, a 3 year period of confidentiality should be sufficient ‐ your patent application will likely be published 18 months after filing.

Arbitration

Arbitration may prevent public disclosure of confidential information, should a legal dispute arise between the parties.

Choice of law

For enforcement reasons, it is preferable to make the NDA subject to the law of the country in which the recipient resides. However, if the NDA provides for arbitration, select the law in the country of arbitration.