A reader writes: How do I draft a better NDA?
Thanks for sending in your question. Here are some considerations for crafting an NDA:
1. Don’t be sneaky. An NDA should be focused and fair. Provisions like non-solicitation and non-competes don’t typically belong in an NDA and will slow the review process, because you’re likely to get pushback from the other party.
2. Keep it short. In most circumstances and NDA should fit on one page. Forms that are three or four pages long can slow the review cycle because they take longer to review.
You’re more likely to get redlines from the counterparty because you probably have provisions in there that aren’t totally necessary. So how do you get it down to one page? As with all your contracts, the language in your NDA should be clear and concise (see Tip #4, too).
3. One size doesn’t fit all. Most companies have two templates: mutual and one-way. But you probably have lots of use cases for an NDA: prospects, potential business partners, vendors, contractors, visitors to campus, etc.
Think critically about what information is being shared, what you need out of each of these relationships, and how to tailor your templates accordingly.
Considerations might include how you define confidential information, who has access to it, and how it needs to be safeguarded. For example, do you need everything shared between the parties to be “Confidential Information,” or do you want to limit it to only information designated as “confidential”, or to certain categories of information? Do you need any exclusions?
4. Be critical of the boilerplate. It’s common to throw in standard boilerplate terms without considering whether they’re appropriate and necessary. Pay particularly close attention to severability, change-in-control, and exclusion of damages provisions. If a provision is severed, would it fundamentally change the nature of the relationship? What if the receiving party is acquired by a competitor? Do you want to exclude consequential damages if you’re the disclosing party?
Have a burning question about legal ops for Emily? Email email@example.com.
Emily grew up on a very rustic property in the mountains of Southern California before running off to Boston for school. She realized California wasn’t all that bad, so she returned as soon as she could. She will always have a place in her heart for hiking, vintage cardigan sweaters, raising chickens, and unreliable Italian automobiles. Emily spent 15 years as an editor before realizing she loved contracts more than anything in the world.
Procore is a leading provider of cloud-based applications for construction. Procore connects people, applications, and devices through a unified platform to help construction professionals manage risk and build quality projects—safely, on time, and within budget. Procore has a diversified business model with products for Project Management, Construction Financials, Quality & Safety, and Field Productivity. Headquartered in Carpinteria, California, with offices around the globe, Procore is used to manage billions of dollars in annual construction volume.
Ironclad is the #1 contract lifecycle management platform for innovative companies. L’Oréal, Staples, Mastercard, and other leading innovators use Ironclad to collaborate and negotiate on contracts, accelerate contracting while maintaining compliance, and turn contracts into critical carriers of operational business intelligence. It’s the only platform flexible enough to handle every type of contract workflow, whether a sales agreement, an HR agreement or a complex NDA. The company was named one of the 20 Rising Stars on the Forbes 2019 Cloud 100 list, and is backed by leading investors like Accel, Y Combinator, Sequoia, and BOND. For more information, visit www.ironcladapp.com or follow us on LinkedIn and Twitter.
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