South Carolina NDA Template
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A South Carolina NDA, or “nondisclosure agreement,” is a legal agreement between two or more parties which outlines what information needs to be kept confidential. It's often used by startups and companies as a safety net to prevent employees, prospective business partners, and others from disclosing sensitive business information. This way, an NDA helps shield your company's trade secrets and other pivotal details—such as your business plan or client list—from landing in public domain or competitors' hands.
Trade Secret Definition in South Carolina
“Trade secret” means:
(a) information including, but not limited to, a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
(b) A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure. (South Carolina South Carolina Trade Secrets Act § 39-8-20(5))
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Read on to learn more about South Carolina NDAs, including:
What's included in a South Carolina NDA?
Here are some key components that are typically included in a South 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 the world of NDAs, we come across two primary roles: the "disclosing party" and the "receiving party". The disclosing party is the one parting with confidential information, while the receiving party is getting privy to it. This setup holds true for unilateral NDAs. In the case of mutual NDAs, things get a bit interesting as both sides technically play the roles of disclosing and receiving. Another thing, if you're an individual without a formal business entity engaging in either role, then it's completely fine to use your personal name.
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 it comes to your NDA, it's necessary to demarcate what you categorize as "confidential" information. The reasoning is simple. If an employer declares “Everything I converse with you in the next 2 years as confidential,” it could lead to confusion. Imagine a situation a year later where you’re on the brink of leaving and your boss casually mentions that it might rain tomorrow. You then discuss the potential rain with a mutual friend. Did you leak confidential information? Absolutely not!
Courts will find it hard to support clauses with such broad confidentiality requirements. But, drafting an overly narrow definition might expose you to the risk of unintentionally disclosing confidential information, which the receiving party could then circulate freely.
Many businesses opt for a standard definition like the one in our template, but if you need more clarity, we recommend exploring our detailed post about how to precisely define 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
You might spot something common in the template and all NDAs — the need to highlight the “purpose” of the NDA. You could specify something like, “realizing a prototype product for the disclosing party,” or “assessing the potential business interaction between the two parties.” Pinpointing the purpose is important because it outlines why and how the recipient can utilize the confidential info.
Let's suppose you're planning to appoint a developer to create your website. You provide them with your business plans for getting a better understanding of the type of website required. In such situations, you would want to confine the purpose to “development of...” and then illustrate the particular components of the website the developer will be working on. Without this clearly defined purpose, the developer might misuse the confidential information to set up a separate, mirrored business and monetize your confidential info.
In majority scenarios though, the language provided in the template (“evaluating the parties’ potential for embarking on one or more business ventures”) works just fine. Check out our generic purpose definition for more inputs.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
Your utilization of confidential information ties in with the reason behind signing the NDA. This clause essentially affirms that you'll exclusively use the confidential information for the outlined purpose. This may appear self-explanatory, but an alternative scenario where someone is misusing the confidential information for exploiting the company illustrates its importance. This provision ensures that sensitive information stays protected, shielding both parties from possible external interference 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 share your information with the "Recipient", there could be situations where the Recipient is a corporate entity or needs to consult with their lawyer. The "Limited Access" section of your NDA caters to these eventualities.
Most of the time, the language in the template caters to these requirements. But generally, consider who truly needs to access the information, and limit its usage to these individuals. If the recipient needs to disclose information to others, they should ensure those individuals sign an NDA that enforces the same conditions.
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 following section of the NDA to discuss is “exclusions.” Including these exclusions will enhance the probability of your NDA standing firm in a court scenario (if it ever comes down to that). The only exclusion to ponder over is 4(a)(1), and that is only if you’ve previously revealed confidential information to the recipient. Excluding this particular scenario, the stipulated exclusions should work just fine in most instances.
(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 part of the NDA involves the period during which the NDA stands effective. The NDA could be designed to cover a single transaction lasting a couple of days, or you might envisage it to carry forward indefinitely. It depends on the nature or length of the relationship you envision. Quite often, NDAs outlast the transaction or relationship it was designated to cover, persisting for as long as the trade secret remains a secret.
It is advisable to include a clause that emphasizes that the obligation to protect the trade secret carries on even after the business relationship or agreement concludes. If you're not sure about what duration to select, just know that the average duration falls between 1-5 years. Remember, the duration should stretch as long as you desire for the information to remain 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?
No worries if you've already shared some confidential information with the other party! We've got you covered. Just a couple of tweaks to the template will sort that out. Check here how.
How do I protect my trade secret?
The central reason behind using NDAs is the protection of confidential information. But remember, confidential information alone does not hold value — it needs to be part of a trade secret equation. For your information to carry value, it must qualify as a trade secret. If you're unsure about what constitutes a trade secret, whether your information qualifies, or how to adequately safeguard your trade secret, consider delving into our comprehensive guide on the subject.