The NDA (Non-Disclosure Agreement), is an extremely popular business contract. It is designed to protect information of particular importance to a party (usually financial, business, commercial, technological). An NDA may be concluded either before, at the beginning of or during a business relationship. What are the characteristics of an NDA and when is it worth considering signing one?
NDA (or non-disclosure agreements) can take the form of:
Most NDAs (non-disclosure agreements) are bilateral, i.e. they protect the confidential information of each party. On the other hand, it is legally permissible (and also happens in practice) to conclude unilateral NDAs. In this case, the NDA protects only the interest of one party (the one disclosing its confidential information to the other party). Unilateral NDAs are most commonly used when one party is clearly the party providing the product or service and the other party is the classic contractor.
NDAs (non-disclosure agreements) may be concluded:
In the NDA it is important to identify precisely the information to be protected under the contract. Most often this is financial information (e.g. price lists, discount policy, financial condition of the entity), technological information (production methods, tools and means used, industry know-how), business information (content of existing contracts, their terms and conditions, lists of clients or potential clients).
The principle can be applied – the more important the information is to us, the more precisely it should be described in the NDA. On the other hand – does the failure to mark a specific piece of information in the NDA preclude its protection under this agreement? Absolutely not – most often, the content of an NDA indicates certain groups or types of information that are subject to protection (e.g. technological information, financial information) – such a designation should be sufficient in most cases. The content of Article 11 of the Act on Combating Unfair Competition, which defines trade secrets, is also always helpful. What is important – this provision applies regardless of whether the parties have signed an NDA or not. Thus, even without the conclusion of an NDA, Polish regulations provide for a certain baseline level of trade secrecy protection.
Simply entering into an NDA (non-disclosure agreement) and indicating protected information in it is only half of the battle. It is also necessary to introduce sanctions for disclosing confidential information contrary to the agreement. Otherwise, seeking damages for breach of the prohibition on disclosure of confidential information, although possible, will be time-consuming and complicated.
The most common form of sanction is contractual penalties. In practice, quantitative penalties are often stipulated (e.g. PLN 10.000, EUR 20.000 – the parties are free to determine the currency) for each breach of the confidentiality obligation. It is worth defining the level of penalties reliably, e.g. depending on the degree of value of the confidential information concerned by the disclosure.
We observe that a common mistake is to conclude NDAs (non-disclosure agreements) for an indefinite period. The parties make the wrong assumption that this will protect information for a very long period of time. In reality, however, the risks associated with determining the duration of an NDA (non-disclosure agreement) in this way are both:
It is therefore most advantageous to enter into NDAs (non-disclosure agreements) for a sufficiently long (depending on the type of information to be protected) fixed period of time, without the possibility of terminating the NDA before that time.
In practice, it is most common to find NDAs concluded for the duration of the parties’ cooperation and at the same time for a period of 2-10 years after the termination of the parties’ cooperation.
Jeżeli istotny jest dla nas np. termin wykonania umowy, czy rzeczywiste przestrzeganie przez drugą stronę nakazu zachowania poufności informacji – rozważmy uwzględnienie kary umownej w projektowanym kontrakcie. Jest to bowiem jeden z bardziej „plastycznych” tworów prawa cywilnego, który łatwo można zaadaptować niemalże do każdego rodzaju umowy.
