In an NDA it is agreed for what purpose confidential information is provided, which information is considered confidential and what the receiving party may or may not do with that information. In many cases, an NDA further regulates: how information provided can be recognised as confidential information; if this includes information provided orally; from whom the information should originate; the NDA’s coverage of employees or auxiliaries; that the NDA does not obligate parties to enter into further commitments; and the ownership of the information provided.
Many entrepreneurs are familiar with the adage ‘a good conversation begins with an NDA’ and have no problem with signing or requesting an NDA. The pitfalls in drawing up an NDA are less well known. As stated above, the purpose of exchanging and/or providing confidential information is included in the NDA. However, if this purpose is described too precisely, confidential information can already be divulged. An NDA should therefore contain the correct wording and a consequence if the confidentiality is violated (often a penalty). The purpose of this is to deter parties who are only interested in discovering confidential or sensitive information without paying for it.