Non-Disclosure Agreement (Two Party Disclosure)
Businesses may exchange proprietary and sensitive information for many different reasons. It will often be the case that the party which has developed and owns that information will seek to keep it secret, allowing the recipient to use that information for limited purposes and prohibiting further disclosure.
This Non-Disclosure Agreement (also known as an NDA or a Confidentiality Agreement) is designed for use in situations where both parties will be disclosing confidential information to one another for certain stated purposes. An alternative Non-Disclosure Agreement template is available for situations in which only one party is disclosing confidential information.
This document has been updated to allow for the storage of confidential information in the cloud. New optional provisions address the use of a “data storage provider” by the parties, but in each case only with the agreement of the other party. Other parts of the document have also been amended to work with this option, including a receiving party’s obligations to return or erase the confidential information at the end of the agreement (allowing for situations in which it may not be possible for technical or legal reasons for them to fully erase the confidential information) and the optional data protection provisions. It is important to keep in mind that a disclosing party may resist the use of cloud storage by a recipient due to the necessary additional disclosure and the related reduction in control over the information. This will be a point of negotiation and professional legal advice may be necessary or desirable.
The terms of this agreement carefully regulate the parties’ use of the confidential information and further ensure that each party obtains similar undertakings of confidentiality and non-disclosure from all relevant employees and third parties (e.g., sub-contractors) prior to the information being further disclosed.
The confidential information and the purposes for which it may be used should be described in the two schedules provided so as to ensure that both parties to the agreement know exactly what information is confidential and how that information may (and may not) be used. Storage of confidential information, permitted disclosure, mandatory disclosure (e.g., where required by law), and exceptions to confidentiality (e.g., where the information has entered the public domain through no fault of the recipient) are among the other key areas covered by this template.
Optional provisions cater for scenarios in which the confidential information includes personal data. One clause is designed as a “controller to controller” data sharing clause; the other is a “controller to processor” clause (with the relevant disclosing party being the controller and the relevant recipient being a processor, processing the personal data on the disclosing party’s instructions). Note that these clauses are designed for situations in which only a small amount of non-sensitive personal data is being shared between the parties. If a larger amount of personal data and/or higher risk personal data is involved, it may be preferable to use a dedicated data sharing or data processing agreement alongside the NDA. Note that if the recipient of the confidential information in question is storing it in the cloud using the services of a “data storage provider”, they will, in the data protection context, be appointing a processor and must ensure that an appropriate agreement is in place between them and the data storage provider. Note also that the data protection clauses as written do not allow for the transfer of personal data outside of the UK (or, optionally, the EEA). This will be an important factor to consider if the recipient wishes to store information in the cloud.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
This Non-Disclosure Agreement template contains the following clauses:
1. Definitions and Interpretation
2. Confidential Information
3. Receiving Parties’ Confidentiality Obligations
4. Storage of Confidential Information
5. Permitted Disclosure
6. Mandatory Disclosure
7. [Disclosure of Personal Data – Personal Data Sharing]
8. [Disclosure of Personal Data – Personal Data Processing]
9. Proprietary Rights
10. Exceptions to Non-Disclosure and Confidentiality
11. Term
12. Enforcement and Indemnity
13. No Further Obligation
14. No Partnership or Agency
15. Non-Assignment of Agreement
16. Entire Agreement
17. Variation
18. No Waiver
19. Severance
20. Communication
21. Third Party Rights
22. Law and Jurisdiction
and the following schedules:
1. The Confidential Information
2. The Stated Purposes
3. [Personal Data [Sharing] OR [Processing]
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