The perfect NDA (and NDA pet peeves)

10 Sep 22

Among the nearly infinite variety of legal agreements in use today, the non-disclosure agreement for general bilateral business discussions is by far the most ubiquitous. If measured only by the frequency of its use and the significance of its impact, a company’s NDA template is arguably its most important. The $200 million verdict against Oculus for breach of a rather simple NDA speaks volumes as to how critical such an agreement can be.

Every company has its own unique general use NDA template; paradoxically, many companies sign the opposite party’s template more often than not. The party larger in size, reputation, market cap, or perceived importance usually wins the battle of the NDA form. This NDA ritual takes place hundreds of times a day all over the world.

Fundamentally the purpose of the NDA is straightforward: protect confidential information from unauthorized use and disclosure. Both parties have an equal and legitimate interest in protecting their own information, and each party usually recognizes the other side’s interest as well.

The degree to which a bilateral non-disclosure agreement template for general business discussions can be considered “perfect” depends on the degree to which the NDA is simple, concise, and mutual. The best general-use NDAs are those that are completely mutual, unobjectionable and clear. The worst are those that invite unhelpful negotiation and attendant acrimony. Sometimes not negotiating is better than negotiating and “winning” a point or two, given that the parties must work together to forge a new relationship going forward. Crafting the perfect NDA to strike this balance is as much a science as an art, a task that requires knowledge of the law, culture, and business in which our clients operate.

The lawyers of Redline have collaborated to produce the perfect NDA--and its global variations. We've also identified the more common NDA pet peeves that are impediments to perfection.

We invite you to take advantage of this document for your own law practice.


(The intended audience for this post is licensed and practicing lawyers, not laypersons seeking legal advice for their situation. If you are not a lawyer, hire one before using or relying on any information contained here.)