In any given NDA, the key is the definition of the confidential information. It is recommended that the definition should only capture the identified confidential material involved in the transaction and nothing beyond. This ensures that the legal liability of the receiving party is limited to the information actually shared.
If you are receiving information, always look out for languages like:
1. Confidential Information means “and includes without limitation…“
Rationale: The language “includes” or “including without limitation” implies that the definition is not exhaustive and in fact is inclusive of other items which may be same or similar to the items identified. It may also cover items which are not even identified in the definition.
2. Confidential Information will mean 1..2..3.. “and any other information.“
Rationale: The language “and any other information” broadens the scope of definition to an extent that it may actually cover anything under the sun and even beyond. Always negotiate your way to adding only the specific information in the definition section, shared with you by the disclosing party.
3. Confidential Information will mean “data” shared by the disclosing party.
Rationale: The term data is widely used but rarely understood. Unless associated with correct confidential items, it may have far reaching legal ramifications. It is important to understand that what does this data will pertain to? Therefore, it is advisable to always add the nature of data referred to. For example, you may instead write “data relating to employees, clients “. The usage of the term “relating to” will help establish the correct data items shared with the receiving party.
4. Confidential Information will mean 1…2..3.. “and any other non-public information of the disclosing party.“
Rationale: The language “and any other non-public information of the disclosing party.” will simply mean any information of the disclosing party, be it past, present or even future, which the receiving party may not be privy to. It is therefore recommended that the definition only captures the items relevant to the nature of transaction involved.
