Vermont NDA Template
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A Vermont NDA, or “nondisclosure agreement,” is a legal agreement involving two or more parties outlining which information must remain confidential. Startups and businesses often use NDAs to safeguard themselves if employees or potential partners attempt to disclose sensitive information. This crucial legal tool helps protect valuable aspects of your business, such as trade secrets, strategic plans, and client contacts, keeping them away from public exposure and competitors' reach.
Trade Secret Definition in Vermont
“Trade secret” means 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. (Vermont Trade Secrets § 4601(3))
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Read on to learn more about Vermont NDAs, including:
What's included in a Vermont NDA?
Here are some key components that are typically included in a Vermont 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 realm of an NDA, the disclosing party is the one sharing confidential details, while the receiving party is the one absorbing this information. This terminology is typically reserved for one-sided NDAs. However, in the case of mutual NDAs, both parties play dual roles of the discloser and the receiver. One pivotal detail to remember here is whether you're partaking as an individual or a business, which determines if your personal name or your company name will be used in the NDA.
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
In the context of your NDA, it’s crucial you clearly delineate what information is deemed confidential. Imagine a boss stating everything shared in the next two years is confidential. Then, you quit about a year down the line, your boss predicts tomorrow's weather, and you pass it on to a friend. Does that qualify as a leak of confidential data? Certainly not!
Courts wouldn't uphold such an expansive confidentiality clause. But, veering too far in the other direction by overly narrowing the definition runs the risk of inadvertently disclosing information that could then be shared by the receiving party without any restrictions.
Many businesses opt for a standard definition similar to the sample template. If you're uncertain about this, our comprehensive post on parsing through confidential information in your NDA could be of immense help.
“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
Every NDA requires stating its purpose, something you'll notice in our template and all NDA documents. It might be as simple as crafting a prototype product for the disclosing party or perhaps assessing potential collaboration between the parties involved. Highlighting the purpose is vital as it defines the legitimate use of shared confidential content by the receiver.
Imagine hiring a developer to build your website and sharing your business plan so they can tailor the website accordingly. In such instances, focusing the purpose on "development of..." with specifics of the site's elements is very important. That way, you prevent the developer from leveraging your confidential info to launch a similar venture.
In many scenarios, the generic purpose clause from our template ("evaluating the parties' capabilities of pursuing one or more business opportunities") suffices.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
How you handle your confidential data relates directly to your NDA's purpose. Essentially, this clause underscores the rule of using the confidential information strictly for the stated purpose. While it may seem trivial, envision a situation where the confidential info is utilized to exploit the disclosing party. This clause exists to ensure sensitive discussions remain confidential, thus protecting both parties from potential exploitation or harm.
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're providing information to the "Recipient", what if the recipient is a whole organization? Or suppose they need to consult their attorney? The "Limited Access" section of your NDA covers these complexities.
Typically, the language used in the template is adequate. However, you must think about who genuinely needs access to the information and confine its use to only those select individuals. In cases where the recipient needs to disclose the data to someone else, the recipient must procure an NDA from that party agreeing to 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
Another critical component of your NDA is the "exclusions" section. The presence of exclusions bolsters the likelihood that your NDA will hold up if ever taken to court. The only exclusion you may want to remove is 4(a)(1), and that only stands if you have already shared confidential information with the receiver. Otherwise, in most cases, the default exclusions should serve your needs.
(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 section of your NDA defines the duration or 'term' of the agreement. It might merely cover a short-term project, or you might require it to remain effective indefinitely. The rule of thumb here is that the duration should encompass the expected timeframe of the business relationship. It's typical for an NDA to extend beyond the actual relationship or transaction, particularly for as long as your trade secret must remain a secret.
It's a good idea to explicitly mention in your NDA that the trade secret requires protection even after the business relationship or contractual arrangement ends. If you're unsure about the duration, bear in mind that typical NDAs last between one to five years but should remain effective as long as you need 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?
If you've already revealed confidential information to the other party, don't worry! You can easily adapt the template to cover such scenarios, ensuring you're still protected. Check out how in this post.
How do I protect my trade secret?
The primary intent behind using NDAs is safeguarding your valuable information. But remember, the worth of the confidential information lies in its status as a trade secret. For it to hold value, it must qualify as one. If you're unsure about what constitutes a trade secret, if your information qualifies, or how properly to shield your trade secret, you may want to review our guide on the subject.