Non-Disclosure Agreements (NDAs) are key instruments in Brazilian and cross-border business transactions to protect confidential information shared between parties.
As we live in an environment where data and information are strategic proprietary assets, NDAs are essential to be used in M&A, commercial and banking transaction, among others.
Below are 5 key clauses often included in NDAs used in Brazilian related transactions:
1. Definition of Confidential Information: This clause is crucial because it defines the scope of information that is subject to protection under the agreement. Without a clear definition of “Confidential Information”, parties may have different interpretations of what is protected by the NDA, which can lead to disputes.
Basic Example of Clause: “For the purposes of this agreement, ‘Confidential Information’ includes, but is not limited to, all data, information, documents, plans, specifications, designs, methods, techniques, know-how, processes, strategies, customers, suppliers, and other materials relating to the business of the parties, which are disclosed by either party to the other, verbally, in writing or otherwise, and which are marked as confidential or which, by their nature, should be considered confidential. […]”
2. Confidentiality Obligation: It establishes the responsibilities of the parties to keep confidential information secret and prevents them from disclosing it to third parties without authorization.
Basic Example of Clause: “The parties agree to keep all Confidential Information strictly confidential and not to disclose such information to third parties without the prior written consent of the party owning the information. […]”
3. Exceptions to the Definition of Confidential Information: If applicable, the party receiving confidential information must exclude from its definition information that may be available or publicly accessed by other means.
Basic Example of Clause: “Confidential Information shall not include any information (i) that was publicly known or made available to the public without a duty of confidentiality prior to the time of disclosure to the receiving party; (ii) that becomes publicly known or made available to the public without a duty of confidentiality upon disclosure to the receiving party; or (iii) that is in the possession of the receiving party without obligations of confidentiality at the time of disclosure to the receiving party.”
4. Term of NDAs: It specifies how long the confidentiality obligations set forth in the NDA will remain in effect.
Basic Example of Clause: “This agreement will come into force on the date hereof and will continue to be in effect for a period of [XX] years from this date, regardless of termination of this agreement, for any reason. […]”
5. Penalty Clause for Breach of Confidentiality Duty: it establishes the financial consequences of a breach of the NDA, encouraging parties to comply with their confidentiality obligations.
Basic example of clause: “In case of proven violation of the confidentiality obligations established in this agreement, the violating party agrees to pay the injured party a [compensatory] [non-compensatory] fine in the amount of [XX]. […]”
The above clauses are essential to protect the interests of the parties involved and establish the terms and conditions under which confidential information will be shared and protected.
