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This is a 3-year mutual non-disclosure agreement between Acme Corporation and VendorTech Inc., governing the exchange of technical and business information in connection with a potential integration partnership. While the core confidentiality obligations are standard, the agreement contains a unilateral amendment clause that significantly favors VendorTech, an overly broad definition of confidential information with no materiality threshold, and a one-sided non-solicitation restriction that applies only to Acme. Three notable protections are absent: a data breach notification obligation, a liability cap, and a residuals clause. Recommend negotiating four key provisions before execution.
| Term | Details | Section |
|---|---|---|
| Confidentiality Period | 3 years from date of disclosure for each piece of information | § 2.1 |
| Liquidated Damages | $50,000 per material breach; does not preclude equitable relief | § 7.3 |
| Governing Law | State of Delaware; exclusive jurisdiction in New Castle County courts | § 9.1 |
| Non-Solicitation | Acme may not solicit VendorTech employees for 18 months post-termination | § 6.2 |
| Information Scope | All technical, financial, and business information shared in any medium | § 1.2 |
| Permitted Disclosure | Employees and contractors with need-to-know; written consent required for third parties | § 3.1 |
VendorTech may modify any non-material term of this agreement with 30 days written notice, without requiring Acme's consent.
The definition of "Confidential Information" captures all information shared in any medium with no materiality threshold, making inadvertent breach likely (e.g., casual emails, hallway conversations).
Agreement is silent on what happens to confidential materials upon termination. VendorTech has no obligation to return or destroy Acme's information after the relationship ends.
§ 6.2 prohibits Acme from soliciting VendorTech employees but imposes no reciprocal restriction on VendorTech soliciting Acme's team — a meaningful asymmetry in a mutual agreement.
No obligation for VendorTech to notify Acme if Confidential Information is compromised, accessed without authorization, or subject to a security incident. This creates significant exposure — Acme may not learn of a breach until significant harm has occurred.
Beyond the $50,000 liquidated damages provision, there is no overall cap on total liability. In a breach scenario involving substantial confidential data, exposure could far exceed this amount. Standard practice is to cap total liability at 12 months of contract value or a fixed sum.
No provision addressing information retained in employees' unaided memory. Without a residuals clause, technical personnel who internalize disclosed concepts could inadvertently expose the company to breach claims post-engagement.
The current clause gives VendorTech undue control over contract terms without your consent. This is non-standard in a mutual agreement and should be removed or made bilateral.
Without notification requirements, you lose the ability to mitigate harm after a breach. Push for a 48-72 hour notification window — industry standard under GDPR and most state privacy laws.
If VendorTech insists on keeping § 6.2, require identical restrictions on their side. Asymmetric non-solicitation in a mutual NDA is unusual and worth flagging as a red flag about the counterparty's negotiating posture.
The liquidated damages clause alone is insufficient for high-value technical disclosures. Negotiate an aggregate liability cap equal to the greater of (a) $250,000 or (b) 12 months of fees paid under any related agreement.
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