A Non-disclosure agreement in Nigeria is a legal contract or agreement between parties that share a confidential relationship and any confidential information communicated during the course of the relationship cannot be shared to the general public. Non disclosure agreements can be referred to as a whole agreement or sometimes referred to as confidential statements or confidential clauses contained in a larger agreement or document. The Non-Disclosure Agreement (NDA) is used by organizations for different transactions ranging from mergers, acquisitions, joint ventures, employer-employee relationship, independent contractor relationship etc to restrict the use or disclosure of confidential information shared in the course of the business. It is legally binding on parties to the agreement and where there is a breach of the confidential agreement, the aggrieved party can seek redress for the damages and injunctive reliefs from further disclosure and breach of agreement.
There are two types of non-disclosure agreement recognized in Nigeria
A non-disclosure agreement can be either a Unilateral Non-Disclosure Agreement or a Mutual Non-Disclosure Agreement, which is dependent on which party is providing the secret information.
A unilateral Non-disclosure agreement is a one-way agreement which stipulates the rights and obligations of parties to the agreement. In this case, only one party is required in the business relationship to provide the confidential information to be protected. This is usually the form of non-disclosure agreement commonly used in an employee-employer relationship.
A mutual Non-disclosure agreement is a type of agreement executed between two parties where the information provided will be shared between the parties. The parties involved in the agreement discloses confidential information to each other during the course of any transaction which will be required to be kept a secret and restrict its use and disclosure to any third parties.
Importance of Non-disclosure agreement
The Importance of an Non-Disclosure Agreement cannot be over emphasized as it protects the interests of the disclosing party, particularly and its commercial trade secrets. It also helps to preserve the trust of the relationship as it prevents the leaking of unwanted information. It is used to define confidential information that can be disclosed and what information cannot be disclosed. Non-Disclosure Agreements gives the confidence of parties that where there is a breach by the defaulting party, there are opportunity to seek redress as their rights are duly protected. The commercial implication of a Non-disclosure Agreement is to impose a mutual duty of confidentiality on the parties. It is also an important tool to protect the interest of the disclosing party and the information from being disclosed to a third party.
Clauses contained in a Non-disclosure agreement
There are key clauses to be found in a non-disclosure agreement, this are usually headings found in a contractual agreement which binds party to the agreement. These clauses are:
Parties Clause: for clarity purpose, the identities of parties to the agreement which
includes, the full names of parties and address must be properly described in the
agreement. Where the information will be disclosed to a third party, the full description of the third party must be included in the agreement.
The definition of the Confidential Information: this is usually contained in the definition clause of the agreement, where parties must define in clear terms what confidential
information means. The definition must also state what information is permitted to be
disclosed to a third party either orally or in writing. Parties must endeavor to ensure that the non-disclosure agreement is not vague.
The obligation of the receiving party: it is important for parties to state the main
obligations of the receiving party in the non-disclosure agreement. For example some
obligation clauses are drafted as “Recipient shall only disclose the confidential
information when required by an order from the court or other judicial body of
competent jurisdiction or when required by any valid law being in force in the
Federal Republic of Nigeria”.
The term of the agreement: the importance of this clause is to ensure that all terms in the agreement are expressly stated and no implied terms are included. The duration of the agreement must also be stated. The parties should determine how long the agreement is intended to last for. Also, the time after which the receiving party may disclose the information after the relationship has been terminated should be expressly included.
Exclusion clause: this clause entails that information the recipient party is not expected to be kept secret either because the information is already publicly known information. The recipient party is also allowed to disclose information required by law and also when the party is obliged to do so. It must also state the complete description of cases where
restrictions on disclosure are not applicable.
In conclusion, The purpose of a non-disclosure agreement is to enable parties to a commercial transaction reveals its confidential information to the other party for a limited period of time and only for a specific purpose while the parties negotiate and engage in business transactions. In the event that the receiving party do not consent to continue with the commercial arrangement then the disclosing party stop disclosing and the parties go their separate ways. A non-disclosure agreement is binding as a contractual agreement and it gives assurance that where there is a breach of the agreement by one party, the other party can seek redress for damages resulting from the disclosed information. Finally, it noteworthy to note that a non-disclosure agreement imposes an obligation on parties to it, and confidential agreement can be included in the main contractual agreement or as a standalone agreement between parties.
BY: RESOLUTION LAW FIRM