How to create effective Non-Disclosure Agreements?

How to create effective Non-Disclosure Agreements?

Competition among companies and the business opportunities, ventures, technologies and constant expansion into new international markets mean that companies must protect that which allows them to stand out and differentiate themselves from their competitors, meaning their information, their “singularities”.

This information and singularities can be of various kinds, for example: financial statements, data, processes, know-how, a specific material, recipes, a product, a strategy, a skill, some knowledge, a supplier, or a formula. In general, any business information that is confidential, sensitive, private and that they wish to keep secret because of the importance it represents for the viability of the business.

Non-Disclosure Agreements (“NDAs”) are documents that allow the protection of company information. An NDA gives those who sign it the security of being able to share information in the different stages of the commercial relationship (pre-contractual, contractual and post-contractual). That is to say, in the event that in the pre-contractual stage, it is decided not to continue with the commercial relationship, the information that has been provided will be protected. The same applies when the contractual relationship ends.

The following are some of the elements that must be included in the NDA for it to be effective:

  • Ownership of the information. It must clearly identify who is the owner of the confidential information that will be shared with the other party and how it is protected.
  • Detail, limitation and scope of the information to be shared. Within the agreement it is important to state what type of information will be shared between the parties so that it can be properly identified and individualized, thus providing certainty for the parties. The scope of the confidentiality obligation refers to the information that will be covered by this agreement, its characteristics, the areas involved that handle it and know it, identification, the level of care of the information, its treatment once the NDA is terminated.
  • The recipient party must be clear about the scenarios under which it is authorized and may disclose confidential information. This may occur, for example, in the case of its own employees, its suppliers or in response to a requirement made by a competent authority.
  • The term during which the agreement will be in force must be specified, which means, the time that the confidential information will be shared and the period during which the obligation to maintain the confidentiality of the information will be in force. The term of the obligation to maintain the confidentiality of the information is usually agreed for several years and may even exceed the commercial relationship between the parties or be indefinite. The term will depend on the nature of the information.
  • The penalty, fine or sanction to be imposed on the parties in case of breach of their obligation to maintain in reserve and confidentiality the information they have come to know must be quantified and respond mainly to the importance and sensitivity of the information that has been shared and to the damages caused against one of the parties.
  • Non-confidential information. All information that will not be considered confidential and therefore is not protected by the NDA should be noted. An example of this type of information is the one that can be found in public records of free access.
  • Conflict resolution. Adequate mechanisms should be established to provide a prompt remedy in the event of a possible breach by any of the parties. It is advisable to establish a contractual domicile. Arbitration is considered to be more agile than the ordinary administration of justice.

It is necessary to take into account that each case has its peculiarities and therefore the NDA must be designed for specific situations.

Darío Escobar
Associate at CorralRosales
descobar@corralrosales.com

CorralRosales among the five most popular firms in Ecuador employed by International Legal Management Offices

CorralRosales among the five most popular firms in Ecuador employed by International Legal Management Offices

DETAILS

DATE: 07-04-2021

MEDIA: Latin Lawyer

The prestigious Latin Lawyer media has published its latest report entitled: “Who Represents Latin America’s Biggest Companies?”. CorralRosales stands out among the five most popular firms in Ecuador employed by legal management offices in the last year.

In recent months, and because of the COVID-19 pandemic, law firms have had to adapt to a new and complex situation. They have seen their customer relationships and expectations change. During 2020, external lawyers have been an important help for the companies’ legal services. CorralRosales has undoubtedly adapted to the “new normal” and Latin Lawyer acknowledges this in its recent yearly report.

Our firm, CorralRosales, appears among the most popular Ecuadorian firms along with other large law offices. For this report, an investigation is carried out by LACCA (Latin America Corporate Counsel Association), based on the 100 firms with the highest income in the region. The initial sorting order considers income for the last full year, headquarters and their subsidiaries as a whole, news and articles on agreements and cases related to these firms.

CorralRosales is proud to appear in this renowned Latin Lawyer report. We thank all those who have made it possible for our firm to continue growing. We will keep working hard to provide our customers with the best service.

Thanks again. Congratulations team!

If you want to see the article (under registration), click here.