Erdal Nuhbasa – Law and Consulting Firm – Legal Services

ERDAL NUHBASA 

LAW AND CONSULTING FIRM

privacy-law

1. What is a Non-Disclosure Agreement?

     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.

2. When do we need to make an NDA agreement?

     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;

  1. Business Partnerships
  2. Employee Contracts
  3. Intellectual Property Protection
  4. Client Relationships
  5. Mergers and Acquisitions
  6. Vendor or Supplier Agreements

3. What should be considered when entering into an NDA agreement?

    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;

  • Scope of Confidential Information: Clearly define what information is considered confidential and subject to the NDA.
  • Purpose of Disclosure: Specify the purpose for which the confidential information is being disclosed and the intended use of the information by the receiving party.
  • Duration of Agreement
  • Obligations of Parties: This may include requirements for safeguarding the information, limiting access to authorized personnel, and using the information only for the specified purpose.
  • Exceptions to Confidentiality: Clarify how such exceptions will be handled under the agreement.
  • Legal Remedies and Enforcement: Define the consequences of a breach of the NDA, including remedies such as injunctive relief, damages, or indemnification. Specify the jurisdiction and governing law that will apply in case of disputes arising from the agreement.
  • Review by Legal Counsel: It’s advisable for both parties to seek legal advice before signing the NDA to ensure that their rights and interests are adequately protected and that the agreement complies with applicable laws and regulations.

4. What are the out of scope situations in an NDA agreement?

    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:

  • Information that is publicly known at or before the time of disclosure,
  • Information that becomes publicly available at a later date without breach of the contract and without attribution of fault to the parties,
  • Information known to the parties prior to any commitment to confidentiality,
  • Information that is legally required to be disclosed pursuant to applicable laws or regulations or a court decision or administrative order,
 

     The Parties may, at their discretion, extend the scope of exclusion beyond these circumstances.

5. Conclusion

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     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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