North Carolina NDA Template
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A North Carolina NDA, or “nondisclosure agreement,” is a legal agreement between two or more parties outlining the confidential information that must be kept under wraps. Startups and businesses use NDAs as a safety net to safeguard against employees, potential partners, and others who might reveal the company's sensitive details. These agreements serve as protectors, guarding your precious trade secrets and vital specifics, such as your carefully-crafted business strategy or valuable client directory, from being exposed to competitors or the public eye.
Trade Secret Definition in North Carolina
“Trade secret” means business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:
a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by 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.
The existence of a trade secret shall not be negated merely because the information comprising the trade secret has also been developed, used, or owned independently by more than one person, or licensed to other persons. (North Carolina Trade Secrets Protection Act § 66-152(3))
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Read on to learn more about North Carolina NDAs, including:
What's included in a North Carolina NDA?
Here are some key components that are typically included in a North Carolina Nondisclosure Agreement:
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Disclosing and Receiving Party
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Definition of Confidential Information
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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 this section, the disclosing party is the one sharing confidential information, and the receiving party is the one obtaining that information. This applies to unilateral NDAs, but for mutual NDAs, both parties are considered disclosing and receiving. Bear in mind the difference between "Company Name" and "individual" — if you're an individual either disclosing or accepting information, just use your name (since you're not a company).
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 crafting your NDA, you must determine what information is considered "confidential." For instance, imagine an employer saying, "Everything I tell you for the next 2 years is confidential." A year later, you're about to resign, and your employer mentions rain is forecasted for tomorrow. Later that evening, you tell a mutual friend about the weather prediction. Did you disclose confidential information? Absolutely not!
A court would never enforce such a sweeping confidentiality clause. However, if the definition is too narrow, you risk inadvertently disclosing confidential information, which the receiving party could then share freely.
Most businesses use a standard definition like the one in the template, but if you need more guidance, our in-depth post on defining confidential information in your NDA offers helpful pointers.
“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
All NDAs require you to specify the agreement's "purpose." For example, you might say, "to manufacture a prototype product for the disclosing party," or "to evaluate the potential business relationship between the two parties." The purpose matters because it clarifies how the recipient of confidential information can use it.
Suppose you want to hire a developer to build your website and share your business plans to give them a better understanding of the website's goals. In this case, you'd want to narrow the purpose to connect with the "development of..." and then describe the specific website aspects the developer will create.
Without this purpose restriction, the developer could use the confidential information to launch a separate, similar business profiting from your confidential data.
Generally, though, the template's language ("evaluating the parties' capabilities of pursuing one or more business opportunities") works well.
Take a look at this generic purpose definition.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
The way you use confidential information ties into the purpose of the NDA. This provision essentially states that the information will only be used for the specified purpose. While this may seem obvious, consider a situation where someone exploits the confidential information. This provision guarantees sensitive discussions stay private, shielding both parties from potential outside harm or influence.
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
If you're sharing your information with a "Recipient," what happens when the Recipient is actually a company? Or perhaps the recipient needs to consult their lawyer? Such scenarios are addressed in the "Limited Access" section of your NDA.
In most situations, the template's language is sufficient. Generally, think about who needs access to the information and limit its use to those individuals. Whenever the recipient shares the information with someone else, they must ensure that person also signs an NDA agreeing to the same 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
The next NDA section deals with "exclusions." Including these exclusions boosts the likelihood of your NDA being upheld in court (if it ever reaches that stage). The only exclusion to consider removing is 4(a)(1), but only if you've already disclosed confidential information to the recipient. Otherwise, the exclusions as written should suit 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
This provision concerns the NDA's term or duration of effectiveness. An NDA might cover a single transaction lasting a few days or remain in effect indefinitely. The length of the agreement should encompass the anticipated relationship's duration and often extend beyond the specific transaction or relationship, particularly as long as the trade secret remains secret.
You may want to include a provision stating that the trade secret must be protected even after the end of a business relationship or contractual agreement. If you're unsure about the time frame, note that the average period is between one and five years. Remember, the time must last as long as you need the information to stay confidential.
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 you have already shared some confidential information with the other party, don't worry! We can help you adjust. If this is your case, you'll want to modify the template in a couple of places. Here's how.
How do I protect my trade secret?
The main reason for choosing NDAs comes down to safeguarding your confidential information. Confidential information by itself, though, doesn't have any value — it's all part of the bigger picture: your trade secret. For this information to have value, it needs to qualify as a trade secret. If you're not certain what a trade secret is, which information qualifies as such, or how to properly protect your trade secret, refer back to our guide on this matter.