A non-disclosure or confidentiality agreement is probably the most used legal mechanism for safeguarding private information. This, however, does not mean that the majority of businesses and individuals are not making mistakes in drafting, signing, and enforcing these contracts. Whether this is a business partnership, an engagement with a consultant, or an exit package negotiation just knowing what to avoid can save you time, money, and damage to your reputation. The four major missteps to avoid are highlighted below.
1. Vague or Overly Broad Language
One of the most common mistakes in confidentiality contracts is using unclear or overly broad terms. Clauses that are too general can be difficult to enforce, while excessive restrictions may be deemed unreasonable by a court. A well-drafted NDA should clearly define what information is confidential, how it can be used, and the length of the obligation. If you’re unsure about the language used in your agreement, speaking to Lithuanian lawyers in London can help ensure the document is both fair and enforceable, especially if you need advice in your native language.
2. Failing to Identify the Purpose of Disclosure
Every confidentiality agreement should state the reason confidential information is being shared. Without this, the contract may be open to interpretation, increasing the risk of misuse. Whether the information is related to product development, investment proposals or employee matters, be specific. This helps ensure both parties understand the limits and expectations of the disclosure.
3. Ignoring Exceptions to Confidentiality
NDAs must include provisions for the timing and manner in which information may be disclosed lawfully – for instance, under a judicial order or other such requirement of the law. Not setting out these exceptions can lead to confusion and leave parties exposed to unnecessary legal risks. A well-drafted clause on exceptions will protect both parties and set out a clear framework in case of disputes.
4. Not Considering Enforceability Across Jurisdictions
In cross-border agreements, it’s vital to consider which jurisdiction’s law will govern the NDA. Without this, enforcement becomes complex and unpredictable. Parties should agree on governing law and forum for dispute resolution at the outset, ideally with legal guidance to ensure enforceability wherever needed.
A confidentiality agreement is as strong as its weakest clause. The risks in the long term of taking shortcuts and using generic templates can be much, much greater than short-term convenience. Consider what’s truly at stake: intellectual property, business relationships, the future of your company. If the cost of getting it wrong is high, expert legal advice will be worth every penny.