WHAT IS A MUTUAL NON-DISCLOSURE AGREEMENT

A non-disclosure agreement is an enforceable agreement which creates a legally binding confidential relationship between a person or business who holds a trade secret which he/they wish to disclose to another party.

Often both parties may require disclosure of trade secrets and a mutual non-disclosure agreement may be required. In a mutual NDA, both parties agree not to disclose information that either has received which would be considered confidential. A mutual non-disclosure agreement is also referred to as a bilateral non-disclosure agreement.

WHEN ARE MUTUAL NDA’S USED?

Mutual NDA’s are more frequently used by parties considering joint ventures and mergers. Both parties need to reveal information that is confidential and may include trade secrets and insider business practices in order to be considered for the proposed merger.

However, the parties do not want their respective information released to the general public or other businesses in the event that the proposed merger is not brought to fruition. It is this possible or in some cases probability of the parties fail to complete the anticipated merger or joint venture that compels the parties to enter into a mutual non-disclosure agreement.

WHEN DO YOU NEED A MUTUAL NON-DISCLOSURE AGREEMENT? 

Mutual NDA’s are more frequently used by parties considering joint ventures and mergers. Both parties need to reveal information that is confidential and may include trade secrets and insider business. However, the parties do not want their respective information released to the general public or other businesses if the proposed merger is not brought to fruition. It is this possibility or in some cases probability of the parties’ failure to complete the anticipated merger or joint venture that compels the parties to enter into a mutual non-disclosure agreement.

WHAT’S INCLUDED IN A MUTUAL NON DISCLOSURE AGREEMENT?

The Mutual NDA contains most of the same elements as the unilateral NDA and it is more efficient because the restrictive language of the NDA is binding upon both parties. In other words “it cuts both ways”. This language acts as a deterrent to disclosure for the parties because they each know that not only are they bound by the agreement any disclosure by them could trigger the release of their protected information. The litigation stemming from a mutual violation of the mutual NDA would become a quagmire of allegations of unclean hands. With such deterrents in mind, the mutual NDA appears to be a good tool that allows the parties to reveal needed confidential to each other with fear of dissemination to others.