NDAs: What every entrepreneur must know [part 2]

In our previous post we have described what an NDA is and what is its typical scope. We continue with potential problems you should be aware of. Abusive provisions. Not all NDAs are plain vanilla boilerplates as some may contain quite surreptitious provisions. To give you an example, in our practice we have seen a party trying to impose a provision allowing it to use in the future all the information passed by our client (including ideas, concepts, know‐how etc.) which that company’s employees encounter and memorize during the cooperation. It goes without saying that such clause negates the primary purpose of the NDA. Amusingly, that provision was euphemistically called as a “residue clause” and was introduced not by a…

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NDAs: What every entrepreneur must know [part 1]

A company may find it necessary to disclose confidential information to third parties under a number of cases. In the context of startups, it usually happens when an entrepreneur has to share confidential information with prospective investors or partners while trying to raise first rounds of financing or grow the company. This issue is particularly sensitive for an early stage startup as a unique idea or execution is often its most valuable asset. In this article we will cover the most common way to protect it, i.e. a “Non-Disclosure Agreement,” or “NDA”. NDA basically allows the parties to share confidential information for the purpose of exploring potential partnership based on a mutual understanding that neither party may disclose any confidential information…

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