\u201cNDAs, Confidentiality, Non-Solicitation, and Non-Competition Agreements\u201d<\/p>\n
PART THREE \u2013 Unilateral or Bilateral? Term or Duration?<\/p>\n
Welcome to Part 3 of our latest series here on \u201cWords of the Law,\u201d the Online Legal Translations blog.<\/p>\n
In the prior two sections of this series, we talked about the importance of understanding how the terms NDA<\/em>, Non-Competition<\/em>, Non-Solicitation<\/em>, and Confidentiality<\/em> function in a contract-signing context, and we took a deeper dive into the differences between Non-Competition<\/em> and Non-Solicitation<\/em> agreements.<\/p>\n In this installment of the series, we are going to talk about two important sets of terms: \u201cunilateral\u201d vs. \u201cbilateral\u201d and \u201cterm\u201d vs. \u201cduration.\u201d\u00a0 It is very important to know what these terms mean and the differences among them, before you enter into an NDA, non-compete, non-solicit or confidentiality agreement.<\/p>\n \u201cUnilateral\u201d or \u201cBilateral?\u201d <\/strong>These terms can apply to a stand-alone nondisclosure agreement (NDA) as well as to just the confidentiality section of a broader agreement.\u00a0 It all depends how the agreement’s language is worded.\u00a0 In Part 4 of this series, we will be discussing Confidentiality in detail.<\/em><\/p>\n In unilateral<\/em> agreements, also sometimes called \u201cone-way\u201d agreements, only one party is sharing sensitive information with another party. For example, a potential client might say \u201cwe\u2019ll show you, a potential language services provider, the text of the patent we would like you to translate, and you\u2019ll promise not to share this highly valuable, confidential information with anyone else.\u201d\u00a0 In these cases, the agreement’s terms will often identify one party as the “discloser” and the other party as the “receiver,” and the rights and obligations of each will be tailored to the roles of the respective parties as discloser or receiver.\u00a0 The discloser<\/em> typically has very few confidentiality obligations under a unilateral agreement regarding confidential information, while the receiver<\/em> typically has very stringent and very specific obligations under a unilateral agreement.<\/p>\n With a bilateral<\/em> agreement, both parties share<\/em> information with, and both parties receive<\/em> information from, each other, along with the assurance that their information will not be shared to any third parties. Often times the parties agree not only to refrain from sharing substantive information they have disclosed to each other, but they may also agree not to share the even the fact that they are in talks <\/em>about possibly working together in the future.<\/p>\n Even in cases where only one party is actually disclosing information, the receiving party may decide to insist on a bilateral<\/em> form of agreement, in order to ensure that the agreement is balanced, as the parties will not want to obligate themselves to any burdensome terms that could affect them in the future.\u00a0 In such a bilateral agreement, the wording will allow for either party<\/em> to be in a role of a discloser or a receiver under the \u00a0agreement and the two parties will typically have the same obligations with respect to confidential information about the other party.<\/p>\n It is rather unusual have a stand-alone bilateral nondisclosure agreement in a translator-agency relationship\u2014in general only the agency, not the translator is sharing confidential information.\u00a0 The translator\u2019s personal information is ordinarily protected by function of law.<\/p>\n To summarize, in a typical unilateral agreement regarding confidential information, the obligations of only one party, the receiver<\/em> of information, are discussed.\u00a0 In a bilateral agreement, both parties are envisioned as potential receivers or<\/em> disclosers, and the obligations are typically the same for each party, regardless of which party is the receiver and which is the discloser.<\/p>\n \u201cTerm\u201d or \u201cDuration?\u201d <\/strong>These words describe two distinct time periods which are important to distinguish when entering into confidentiality and nondisclosure agreements.\u00a0 The term<\/em> describes the length of the agreement and the duration<\/em> is how long the obligations of the agreement are intended to last.<\/p>\n The agreement\u2019s term<\/em> describes the effective period of the agreement.\u00a0 A typical nondisclosure agreement, which is signed by parties who want to share information before they can decide if they want to do business together will be valid for 90 days. Nothing ever gets done as quickly as we hope it will, so there will usually be automatic renewals for successive 90-day periods, while the parties continue to negotiate toward an overall service agreement.<\/p>\n Once the parties do decide to do a larger deal and sign a service agreement, the terms of the NDA are usually recognized under, and subsumed by, the service agreement into which the parties enter.\u00a0 If the parties walk away from their negotiations and do not end up entering a service agreement, they let the NDA expire.\u00a0 A service agreement typically runs for a term of 3-5 years.\u00a0 Contracts that go on forever, known as \u201cevergreen contracts\u201d are not favored by businesses or the courts.<\/p>\n The relevance of the term<\/em> of the NDA or service agreement is that only the information received during the term<\/em> of the agreement is protected by the terms of the agreement.\u00a0 Once your contractual relationship is over, if they then send you confidential information, such protective terms would not apply to this newly disclosed information.<\/p>\n So, suppose you have signed a 90-day NDA with a company to discuss doing business together and during that time, you decide not to do the deal. Does this mean that on day 91 they can start sharing what you did give them with the world?\u00a0 Not if the agreement is written properly.\u00a0 This brings us to our second important period of time that we need to understand–duration<\/em>.<\/p>\n The other time period that is important is the duration of the obligation<\/em> of the parties not to disclose the information after the expiration of the term<\/em> of the agreement.\u00a0 In our example above, the parties let the 90-day agreement expire and do not enter into a business agreement of any other kind.\u00a0 The recipient must continue to treat as confidential, any information obtained during the 90-day period for certain amount of time thereafter<\/em>.<\/p>\n It might say something like \u201c(n)otwithstanding the termination of the Agreement, each party\u2019s duties with respect to the other\u2019s Confidential Information shall continue for 3 years after the termination of the agreement.\u201d Some contracts say: \u201cx years after the date of disclosure.\u201d<\/p>\n Just how long can that additional period of obligations last?\u00a0 If you\u2019re the person who shared the information with a potential business partner and they didn\u2019t end up doing a deal with you, you might reasonably want them to keep that information confidential forever<\/em>.\u00a0 However, the law does not like to place such a burden on another party indefinitely<\/em>.\u00a0 A typical, and generally viewed as reasonable<\/em> amount of time, usually begins at the end of the term of the agreement or upon disclosure of the relevant information, and runs for another 1-3 years. This period of time can even be shorter if the information is soon to become non-confidential–so called \u201climited-life\u201d information–such as the names of winners to be announced at an upcoming awards ceremony.<\/p>\n For example, an agreement term might be three years long, and the obligation of confidentiality regarding information disclosed to the recipient during that 3 years runs until the agreement expires, and for a specified amount of time afterward.\u00a0 Be sure that whatever time periods you choose for term and duration suit you or your client reasonably.<\/p>\n As a side note, if the information disclosed constitutes a trade secret<\/em>, such as the Coca-Cola secret recipe, the information can be,<\/em> theoretically, protected forever<\/em>, or for the period of time during which the trade secret remains a trade secret<\/em>. This is because intellectual property laws would come into play.<\/p>\n So, to summarize term<\/em> and duration<\/em>: a nondisclosure agreement or the confidentiality provision in an agreement will have a term of effectiveness\u2014when the agreement starts and ends.\u00a0 Any information received during that term falls within the obligations of the agreement.\u00a0 There will also usually be a provision in the agreement setting the duration of obligation\u2014the period starting at the end of the agreement (or when the information is disclosed) and extending, typically, for 3 years, during which the confidentiality obligations regarding the information received during the term of the agreement will continue to apply.<\/p>\n We hope you have enjoyed this explanation of unilateral<\/em> vs. bilateral<\/em> agreements and the term<\/em> and duration<\/em> regarding agreements regarding confidential information.\u00a0 Please do come back for the final installment in this series where we dive into what typically constitutes \u201cconfidential\u201d information, exceptions thereto and common contractual terms.<\/p>\n","protected":false},"excerpt":{"rendered":" \u201cNDAs, Confidentiality, Non-Solicitation, and Non-Competition Agreements\u201d PART THREE \u2013 Unilateral or Bilateral? Term or Duration? Welcome to Part 3 of our latest series here on \u201cWords of the Law,\u201d the Online Legal Translations blog. In the prior two sections of this series, we talked about the importance of understanding how the terms NDA, Non-Competition, Non-Solicitation, and Confidentiality function in a contract-signing context, and we took a deeper dive into the differences between Non-Competition and Non-Solicitation agreements. In this installment of the series, we are going to talk about two important sets of terms: \u201cunilateral\u201d vs. \u201cbilateral\u201d and \u201cterm\u201d vs. \u201cduration.\u201d\u00a0…<\/p>\n","protected":false},"author":1,"featured_media":3775,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[127],"tags":[128,129,134,135,136,137,138,139,140,142,143,144,145],"yoast_head":"\n