A non-disclosure agreement is a type of contract where the parties agree to share confidential information with one another based on certain conditions.
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What Is A Non-Disclosure Agreement
A non-disclosure agreement is an agreement where the parties agree to share confidential information with one another subject to confidentiality obligations.
Commonly referred to as an “NDA”, this type of agreement is probably one of the most common types of agreements you can find in the commercial world.
A non-disclosure agreement can be used in many business situations, such as in the context of a proposal, to negotiate a new business transaction, to share pricing, business requirements, or others.
The objective of the agreement is to allow one or more contracting parties to share sensitive information while maintaining control over the information shared.
A company may enter into a non-disclosure agreement with its suppliers, vendors, employees, shareholders, executives, or other stakeholders to protect its confidential information.
Keep reading as I will further break down the non-disclosure agreement in Quebec.
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Why Non-Disclosure Agreements Are Important
Non-disclosure agreements are crucial for businesses of all sizes to ensure they maintain control over their information.
No matter the business, no matter the industry, no matter the nature of the commercial transaction, non-disclosure agreements are used to ensure that the parties define what they consider to be “confidential” information, what is the scope of the exchange of information, how the parties should protect the information, and remedies in case of breach of the confidentiality agreement.
Having a written agreement is key in ensuring that you have a legally binding agreement to enforce a potential breach of another party’s confidentiality obligations.
Another reason why it’s important to execute a non-disclosure agreement is that companies may share information that they consider to be their trade secret.
Trade secret is a form of intellectual property where the owner or creator of the information must ensure the trade secret remains confidential and take reasonable measures to protect the information.
By having non-disclosure agreements in place, companies can effectively provide evidence that the information they share was highly sensitive, potentially trade secret.
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Key Elements of Non-Disclosure Agreement
A non-disclosure agreement will generally have five key elements: identification of the parties, the definition of what’s confidential information, the scope of the agreement, exclusions, and term.
The identification of the parties is important to ensure that it’s clear who are the parties legally bound by the agreement.
The definition of what’s confidential is important as the parties need to provide specific details as to what information they consider confidential.
The scope of the agreement indicates why the parties have entered into the NDA, who will share information with who, and related to what type of transaction.
Should there be any exclusions or information that should not be considered confidential, the agreement should clearly mention it.
You then have the non-disclosure agreement term representing the duration for which the confidential information should be protected.
Although these are the key elements of an NDA, the parties can choose to include any other provision that they consider essential for the transaction.
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Standard Non-Disclosure Agreement Content
Let’s look at what a standard non-disclosure agreement can contain.
A non-disclosure agreement is a standalone agreement containing the following provisions:
- Identification of the parties
- Scope of the agreement
- What information is considered confidential
- What information is not considered confidential
- Ownership of confidential information
- What constitutes a breach of confidentiality obligations
- Remedies in case of breach
- Term of the confidentiality agreement
- Governing law and venue
Depending on the needs of the parties, the non-disclosure agreement can be kept simple or highly detailed.
For example, an NDA signed by a potential prospect for the purchase of a software product may be very different than the NDA in the context of a merger of two conglomerates.
Most companies have their standard non-disclosure agreement but in some cases, the standard agreement should be amended to include additional protective provisions.
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Unilateral NDA vs Mutual NDA
A non-disclosure agreement can be either unilateral or mutual.
A unilateral non-disclosure agreement is when one party is protected by the confidentiality provisions of the agreement.
Thus, it’s a “unilateral” agreement where one party benefits from the legal protections offered.
A unilateral agreement is usually used when only one party is the one sharing information with another.
On the other hand, a mutual non-disclosure agreement is a type of agreement where both parties negotiate legal protections for sharing confidential information.
The parties can design a mutual non-disclosure agreement where both parties are equally protected or the parties can negotiate an agreement where each party is bound by different types of confidentiality obligations.
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Non-Disclosure Agreement Governing Law
In Canada, the provincial contract laws will apply to non-disclosure agreements and, in certain cases, federal statutes.
As a result, in Quebec, the non-disclosure agreement will generally stipulate that it is governed by the laws of Quebec and the laws of Canada as applicable.
In Quebec, the Civil Code of Quebec represents the statutory basis for most NDAs.
When a contract is legally formed in Quebec and respects its formation requirements, then the Quebec courts will enforce non-disclosure agreements.
In the event of a breach of contract, the non-breaching party can file a lawsuit before the Quebec courts seeking compensation for damages suffered.
In addition, if the non-breaching party can seek specific performance and injunctive relief to ensure that the breaching party ceases any violation to the confidentiality agreement.
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Takeaways
So there you have it folks!
What is a non-disclosure agreement?
In a nutshell, in Quebec, a non-disclosure agreement is a type of agreement where one or more parties seek to protect their confidential information when shared with another party.
You can enter into an NDA with a client, partner, reseller, employee, board members, executives, shareholders, or any individual or entity.
Non-disclosure agreements are enforceable in Quebec courts and should be carefully drafted just like any other contract.
Companies that are looking to protect their trade secrets, customer lists, price list, processes, designs, drawings, materials, documents, or any other information they share with others need to ensure proper confidentiality agreements are in place.
If you’re looking to do business in Quebec and have a particular need for an NDA or legal advice, be sure to consult with a qualified attorney.
Good luck!
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