Non Disclosure Agreements

Confidentiality agreements, Non Disclosure Agreements, commonly known as NDAs, are of great importance in business-to-business relations, as can be seen in the following examples. Service providers (IT, maintenance of facilities and machinery, among others) often have access to confidential information of the company receiving such services (production processes, organisation and facilities, etc.). The same happens when an undertaking collaborates with another undertaking in the development of products or research, exchanging information that each of them, reciprocally, considers to be a business secret. Likewise, in cases where one company is interested in acquiring another, or in acquiring a significant shareholding in it, in the process of which it provides relevant information on a confidential basis.

The NDA document may contain confidentiality commitments by one company with respect to the information it receives from the other, but it may also provide for confidential information to flow in both directions, whereby each of the parties is both a sender and a receiver of confidential information. These commitments can be inserted in the contract between undertakings in which they agree to hand over confidential information, or at a later point in time, as an annex to the contract. However, it is preferable for the NDA to be incorporated into a document “prior” to the establishment of the main contractual relationship, so that the NDA acts as a condition for negotiations on the main contract to commence or continue.

The NDA is not a “moral” undertaking not to disclose confidential information received from another company, but it is a contract from which such an obligation derives, even if it is difficult to quantify damages in case of breach, if this issue has not been properly regulated in the NDA.

It is advisable to sign an NDA prior to the entering into a contract, i.e. as a condition for an agreement to be reached between the parties concerned.