During the course of entering into a business relationship or during the existence of a business relationship amid the parties – It is common for the parties to exchange certain confidential information with each other.
Accordingly, the parties will execute a non-disclosure agreement (NDA) to protect the confidential nature of the information exchanged amid them for a certain period of time.
Like every contract, NDA will also have a contractual term which will enable the parties to share the confidential information with each other during such contractual term.
In addition to NDA term it will also have a NDA protection period separately from the NDA term.
Here two questions have to be taken into consideration to understand the variance amid the NDA contractual term and NDA protection period.
1) How long the parties to the NDA can legally share information with each other?
a) NDA Contractual term will be the period pursuant to which the parties will be legally permitted to exchange confidential information. Accordingly, the recipient will be obliged to protect the confidentiality nature of the information received from the discloser during the NDA contractual term. However, the recipient will not be under any compulsion to accord confidentiality treatment to the confidential information received after the expiry of NDA contractual term.
2) What is the duration the recipient of confidential information will be obligated to protect the confidentiality nature of information received from the discloser?
A) The obligation to protect the confidential information shared by the parties during the NDA contractual term will survive the NDA contractual term and will be in existence to the extent as defined in the NDA.
Sample clauses of NDA contractual Term and NDA protection period:
1) NDA Contractual Term: The NDA will be in effective for a period of two years from the effective date of the NDA.
2) NDA protection period: The recipient of the confidential information shall protect the confidentiality of such information for a period of 5 years from the date of disclosure of the confidential information.
From the aforesaid sample clauses, NDA term is 2 years and the protection period is defined as 5 years. It is evident that NDA contractual term and NDA protection term will be different from each other.
To conclude, NDA contractual term is the time duration for the disclosure of confidential information amid the parties. NDA protection period is the duration in which the recipient shall be obligated to protect the confidentiality nature of the information received during the NDA contractual term.