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Why you never want to sign a one-way Non-Disclosure Agreement (NDA)

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Our series of blogs “A day in the life of a Commercial IT Lawyer” cover some of the issues we deal with each day for our clients. Today brings another Microsoft Partner hot potato – “What’s the difference between a mutual NDA and a one-way NDA?”. This is an important topic, don’t get caught out by a one-way Non-Disclosure Agreement or NDA.

Why you never want to sign a one-way NDA

“You may think you’ve been asked to sign a mutual agreement, but don’t believe the title, you must look at the small print. You don’t want to sign a one-way NDA,” warns Kim Simmonds.

What’s the difference between a mutual NDA and a one-way NDA?

Here is what happened.

Our client called, understandably excited about a large project with a well-known educational provider. Their customer wanted to use their own Non-Disclosure Agreement (NDA) for the initial consultancy work rather than our bespoke template. Our client – wanting to keep their prospective customer happy – had wisely asked us to review the NDA before agreeing. Not all NDAs are created equal so it pays to get some specialist technology legal advice, at least it certainly did in this case!

The purpose of an NDA, as I’m sure you’re aware, is to protect confidential information shared between two parties. However, the first thing you need to check is whether the NDA is a mutual or one way. Most businesses are not aware of this detail, leaving them dangerously vulnerable.

Our client was given a one-way NDA, which meant that any information they disclosed concerning the project was not confidential. The customer would be free and clear to reveal anything inadvertently mentioned by our client which could be proprietary, such as business processes or intellectual property.

We promptly re-drafted the NDA to incorporate a mutual clause thereby protecting our client and maintaining a well-balanced approach for their customer. The project is now underway as the sales cycle was completed quickly, without protracted discussions.

Enjoyed this article? 

Make sure you also see our Non-Disclosure Agreement (NDA) page to learn more about why you need an NDA and our answers to frequently asked questions.

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