Delaware NDA Template
Last Updated:
A Delaware NDA, or “nondisclosure agreement,” serves as a legal pact between two or more parties, laying down rules on what information must be kept under wraps. Startups and established businesses alike use NDAs as a safety net, shielding themselves if employees, potential business partners, and others attempt to spill the company's guarded details. They act as safeguards for your company's trade secrets and key information - think business strategies or client directories - preventing them from falling into public domains or landing in competitor's laps.
Trade Secret Definition in Delaware
“Trade secret” shall mean information, including a formula, pattern, compilation, program, device, method, technique or process, that:
a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Delaware Chapter 20, Trade Secrets $ 2001(4))
Thank you for downloading!
How would you rate your free form?
Read on to learn more about Delaware NDAs, including:
What's included in a Delaware NDA?
Here are some key components that are typically included in a Delaware Nondisclosure Agreement:
-
Disclosing and Receiving Party
-
Definition of Confidential Information
-
NDA Purpose
- Use of Confidential Information
- Limited Access to Confidential Information
- Exclusions - What's not Covered
- Term of Confidentiality Period
1. Disclosing and Receiving Party
In the NDA world, the party sharing the confidential nuggets is referred to as the "disclosing party". Their counterpart, aptly named the "receiving party", is the recipient of these prized details. This terminology is standard in unilateral NDAs. For mutual NDAs - where the tide of information flows both ways - both entities wear these hats. Now, a small differentiation comes into play if an individual is partaking in the agreement. In case you're flying solo, either as the informant or the recipient, you just use your name, as company association doesn't apply.
This nondisclosure agreement (this “Agreement”) is dated [Date] (the “Effective Date”) and is between [Company Name of Disclosing Party; e.g. “Max Studios, LLC”; if you do not have a formal legal entity, use your legal name, e.g. “Max Smith”], (the “Company”), and [Company Name of Receiving Party; if receiving party does not have a formal legal entity, use their legal name] (the “Recipient”).
2. Definition of Confidential Information
When structuring your NDA, you need to specify exactly what constitutes confidential content. Imagine an abstract situation where your boss declares everything whispered in your ear over the next 24 months as top-secret. One random day, they share their prowess in weather prediction, assuring you of rain next day. Later, over drinks with a mutual friend, you chat about the forecast. Did you violate the confidentiality clause? Certainly not!
A court wouldn't entertain such an all-encompassing confidentiality clause. However, an exceedingly narrow definition might inadvertently cause you to spill confidential beans, which the receiving party could freely share. Most businesses adopt standard definitions as stated in the template. Feel a cloud of uncertainty hovering? Dive into our detailed post about specifying confidential information in your NDA.
“Confidential Information” means any information that is proprietary or unique to the Company and that is disclosed by the Company to the Recipient during the term of this Agreement, including the following: trade secret information; matters of a technical nature such as processes, devices, techniques, data and formulas, research subjects and results; marketing methods; plans and strategies; information about operations, products, services, revenues, expenses, profits, sales, key personnel, customers, suppliers, and pricing policies; and any information concerning the marketing and other business affairs and methods of the Company which is not readily available to the public. “Confidential Information” also includes information of others that (1) is disclosed under this Agreement, (2) the Company is obligated to protect from disclosure or restricted from using or both, and (3) that would constitute “Confidential Information” if the information belonged to the Company.
3. NDA Purpose
Across all NDAs, you must clearly state the "purpose" of the agreement. This could be something along the lines of, "prototyping a product for the disclosing party," or "assessing potential business dynamics between the parties." It basically suggests why the receiver can utilize the sensitive knowledge.
Let's consider you wish to engage a designer for your website. You pass on your business strategy for him to understand the desired website type. The purpose here would be confined to the “construction of…” followed by specific delineations of the projected website facets. Lacking purpose restriction, the designer could use the inside intel to kickstart a similar venture.
Nevertheless, in many scenarios, the default language in the template (“appraising the capability of parties for pursuing business prospects") suffices. Here's an all-purpose purpose definition for your reference.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
Your application of the confidential insight ties back to why you're crafting an NDA. This section essentially confirms that the secret sauce can only be used for the intended purpose. On the surface, it seems an obvious statement, but observe a situation where the clandestine details are misused to exploit the organization. This section's specificity shields both entities from unintended exposure or damage.
The Recipient shall use Confidential Information only for the Purpose. Unless otherwise agreed in writing, neither party shall disclose to a third party the fact that discussions or negotiations are taking place concerning the Purpose or any of the terms or other facts relating to the Purpose, including the status of negotiations between the parties.
5. Limited Access to Confidential Information
When you transfer details to the “Recipient”, what if the recipient entity is a corporation? Or a situation where the recipient needs a legal opinion on the given information? Such nuances are addressed in the "Limited Access" block of your NDA.
In a majority of circumstances, the default template language suits fine. Think about who really needs this secret intel and restrict its usage to these individuals only. The recipient party, when disclosing the information to someone else, needs to ensure that the third party signs an NDA agreeing to similar terms.
The Recipient shall protect the Confidential Information from unauthorized use and disclosure using the same degree of care that it uses with respect to its own information of like importance, but no less than a reasonable degree of care. The Recipient shall retain the Confidential Information in confidence and shall not disclose Confidential Information to any third party without the Company’s prior written consent. However, the Recipient may disclose the Confidential Information to employees, contractors, consultants, and authorized representatives of the Recipient who (1) require access to the information for the Purpose, (2) are informed by the Recipient of the Recipient’s obligations under this Agreement, and (3) are bound by contract or fiduciary duty to obligations of confidentiality and use restrictions with substantially similar function, purpose, scope, and effect to those of this Agreement and that are at least as protective of the Confidential Information as this Agreement.
6. Exclusions - What's not Covered
Where next? The "exclusions" sector of the NDA. These are crucial inclusions to assure that, should it come down to it, your NDA holds water in court. The one you might need to ponder over is 4(a)(1) -- remove it only if you’ve shared confidential parts with the recipient. Typically, these exclusions are ready to roll in most cases.
(a) This Agreement imposes no obligations upon the Recipient with respect to Confidential Information that: (1) was known to the Recipient before disclosure by the Company as evidenced by contemporaneous records; (2) has become publicly available through no fault of the Recipient; (3) is disclosed to the Recipient by a third party that has the right to make the disclosure to the Recipient and that does not have any obligation of confidentiality with respect to the Confidential Information; or (4) is disclosed by the Recipient with the Company’s prior written consent.
(b) If the Recipient is required by any governmental agency, court, or other judicial or regulatory body to provide any Confidential Information received under this Agreement, then the Recipient will not be deemed to be in violation of this Agreement for the disclosure if the Recipient promptly gives written notice to the Company of the requirement to provide the Confidential Information and cooperates with the Company so that the Company may contest the requirement to provide the Confidential Information. The Recipient may disclose only that portion of the Confidential Information that it is legally required to furnish.
7. Term of Confidentiality Period
The term clause quantifies the effective time period of your NDA. This could range from a few short days for a single transaction or have an eternities-long shelf life. Basically, the duration should sync with the predicted lifespan of your relationship. An NDA often outlives the underlying business deal or partnership, specifically, till the trade secret retains its privy status.
An ideal NDA includes a provision stipulating that the trade secret should remain sealed even after business relations cease. If you're at sea about what exactly to peg here, a safe bet is having a confidentiality span somewhere between one to five years. Remember, the confidentiality period should extend till you wish the info under wraps.
This Agreement will continue for a period of one year from the Effective Date unless: (1) terminated earlier by either party upon written notice to the other; (2) extended by the mutual written agreement of the parties; or (3) superseded by a subsequent written agreement that explicitly sets forth the obligations of the parties with respect to Confidential Information. With respect to business information, the Recipient’s obligations of confidentiality and non-use under this Agreement will expire three years from the termination of this Agreement. With respect to all information that constitutes a trade secret, the Recipient’s obligations of confidentiality and non-use under this Agreement will survive the termination of this Agreement for as long as such information remains a trade secret under applicable law.
What happens if I've already disclosed confidential information?
If the horse has already bolted the barn, fret not! We've got your back. You'll need to tweak the template a tad in this case. We'll guide you through the process.
How do I protect my trade secret?
You resort to NDAs to safeguard your confidential know-how. However, the mere label of confidential information doesn't necessarily make it precious -- it needs to fit into the trade secret puzzle. To truly be of value, it should qualify as one such secret. If you find yourself grappling with the concept of trade secrets or how to shield them, do skim through our comprehensive guide on the matter.