Mutual Non-Disclosure Agreement

A Mutual NDA (Non Disclosure Agreement) is a legal document used by parties engaged in a business arrangement to mutually forbid the sharing of information defined in the agreement.

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When two parties enter into a business negotiation, they often want to protect the sensitive information shared between them. With a Mutual NDA, both sides agree, under the penalty of law, to refrain from discussing details of what is learned about each other and the business arrangement with external parties.

The Mutual NDA is most commonly used to protect proprietary information that meets the following criteria:

  • The data for which the availability is either limited or unknown to the public.

  • If the owner of the information wants to keep it a secret

  • The information provides the owner with a significant advantage.

What Is a Mutual NDA?

A Mutual NDA is a contract between two parties to refrain from sharing the information identified in the agreement.

Other Names for Mutual NDA

Depending on the context and preferred terminology, a Mutual NDA may also be known as:

  • Confidential Disclosure Agreement (CDA)

  • Confidentiality Agreement (CA)

  • Secrecy Agreement (SA)

  • Proprietary Information Agreement (PIA)

Who Needs a Mutual NDA

If two parties want to protect the sensitive information learned about each other (during a business negotiation, business arrangement, or otherwise), they can enter into a Mutual NDA. By signing the NDA, both parties are forbidden from sharing the specified information in whole or in part.

While mutual NDAs mostly involve business entities, they can also be used by a business and an individual. For example, it is often used between an employer and an employee. The employee is forbidden to disseminate the company information learned due to carrying out his or her employment duties.

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How to Create a Mutual NDA with 360 Legal Forms

The Mutual NDA, when entered into between two parties, is a guarantee that one party will not share any confidential information learned about the other party. This is a crucial document that protects your most valuable information and thus must pass legal muster.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Mutual NDA?

To create your document, please provide:

  • Date: The date when the Mutual NDA becomes effective

  • Name and contact information: Legal names and addresses of both parties in the NDA

  • Confidentiality: The nature of the Mutual NDA or the type of information covered

  • Term: The duration of the NDA

  • State laws: The state’s laws that apply

Mutual NDA Terms

  • Non-Circumvention Covenant: In the context of an NDA, this is an agreement to not circumvent or bypass the other company, especially with the classified information gained.

  • Receiving Party: In the context of an NDA, this is the party receiving sensitive information.

  • Disclosure Party: In the context of an NDA, the party discloses confidential information to the receiving party.

Mutual NDA Signing Requirements

The Mutual NDA needs to be signed by both parties. In the case of business entities, an authorized representative signs the document on its behalf.

What to Do with Your Mutual NDA

After signing, the Mutual NDA becomes effective and legally binding. It does not require filing with any government body. Optionally, the document can be witnessed and notarized to strengthen the validity of the signatures.

Frequently Asked Questions

A mutual non-disclosure agreement equally protects both parties listed, while a unilateral non-disclosure agreement only protects the party who is disclosing information. The latter document is often used between a business and employee.

You do not always have to use a written Mutual Non-Disclosure Agreement. In many instances, both parties may settle on an oral agreement. However, having a written contract is common too, and it would possess clear evidence of the agreement and all the provisions. A written contract may reassure both parties and prevent any misunderstandings that might ensue.

A properly executed NDA is legally binding. It is recommended to seek legal advice before breaking the terms in the NDA. Any breach of the contract can result in legal action, including damage compensation and a court order against disclosing the relevant information.

NDAs exclude the following:

  • Non-proprietary information: Information that is not classified as a trade secret or owned by one of the parties.

  • Subpoenaed information: If subpoenaed by a court, a receiving party can disclose information to the authority without violating the NDA.

  • Public information: All information considered public knowledge.

  • Common knowledge: Commonly known information in the industry.

  • Previously known information: A receiving party is not required to protect information learned prior to the NDA.

An injunction is a court order for one party to refrain from a certain act at the threat of contempt of court. As relates to a NDA, a court injunction would most commonly order one party to not disclose any relevant confidential information they are not supposed to share. The defendant who breaches a NDA may be ordered to pay monetary damage, but even before or after that, the claimant can petition the court for an injunction to order the defendant to not disclose the information or to refrain from disclosing any further.

The non-solicitation cluase is a covenant to refrain from using confidential information to poach clients or employees from the other party. While it can be a standalone document, the non-solicitation clause is often inserted into other contracts.

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