Non-Disclosure Agreement is a legal contract between two or more parties that outlines confidential material, knowledge, or information that the parties wish to share with each other for certain purposes, but wish to restrict access to or disclosure of by third parties. It is referred as “Confidentiality Agreement” in Turkish Law and as Non-Disclosure Agreement (“NDA”) in Anglo-American law.
NDAs are commonly used in business settings when sensitive information, such as trade secrets, proprietary information, or client data, needs to be shared between parties while ensuring confidentiality and protecting intellectual property rights.
Nonetheless, it is impracticable to reveal highly valuable trade secrets to an unprotected third party. NDA agreements are frequently negotiated between the parties in order to safeguard such data and documents, which are regarded as “confidential information,” and to stop them from being shared with other parties.
Since a Non-Disclosure Agreement is the surest way to protect the trade secrets and information disclosed, it is required even in the simplest commercial relationship.
However, M&A (“Merger and Acquisition“) is one of the cases where a Confidentiality Agreement is deemed particularly necessary. Accordingly, sharing risk analyses, financial statements, marketing strategies, asset values, etc. related to the company subject to the transaction to the potential buyer can be given as an example. Parties to such transactions enter into NDA Agreements to protect the information disclosed.
NDA Agreements are mostly used in or between;
In order for a contract to be considered as a confidentiality agreement, there is no legal obligation to call it a Non-Disclosure Agreement.
In this sense, agreements that are essentially confidentiality agreements may be issued under a different name and put the parties under confidentiality obligations.
When entering into an NDA agreement, several important factors should be considered to ensure that the agreement effectively protects the interests of all parties involved. These are;
It is not possible to impose confidentiality on the parties by deeming every information obtained as Confidential Information, and it would also be against the law.
In general, information disclosed as a result of the following circumstances is not considered Confidential Information. Therefore, its disclosure will not give rise to any legal liability for the parties.
Circumstances generally excluded from the scope of confidentiality:
The Parties may, at their discretion, extend the scope of exclusion beyond these circumstances.
Although, they are considered to contain standard provisions, Confidentiality Agreements contain different provisions depending on the type of business.
In case of breach of the contract, the parties will be liable both contractually and in tort. This will confront you with undesirable consequences.
Accordingly, it is important to obtain legal support when drafting the contract and the provisions thereof. Contact me for more information.
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