“You get what you pay for” is a common expression, but when it comes to downloading free contracts from the internet, the chances are good that a ‘free’ do-it-yourself contract could turn out be very expensive in the long run. Picking out an internet contract for a DIY project is a little like choosing from a box of chocolates you have never seen before, where each chocolate has a name, but no description. Let me give you some chocolate analogies for the various free NDA’s I have found on the internet.
Free NDA #1: The Chocolate Swirl
This glossy chocolate covered temptation promises a rich chocolate experience…until you bite into it. Then you discover a coating of chocolate much thinner than you were hoping for, and a marshmallow interior rather than the liquid chocolate the wrapping suggested. The ‘Chocolate Swirl NDA’ was entitled “Mutual NDA with Non-Compete”. One of the clauses was titled “NON-COMPETE”, but the language which followed was not a non-compete clause. It dealt with preventing the solicitation (or ’poaching’) of employees of either party. Reliance on the titles in this contract without the guidance of a lawyer or a document comparison tool, would leave you without the protection of a non-compete clause.
Free NDA #2: The Raspberry Supreme
Surely a confection named the ‘Raspberry Supreme’ would be safe for those with an aversion to nuts? Wrong! This one has tiny pieces of almonds embedded in the raspberry filling, like tiny traps for the unwary. The ‘Raspberry Supreme NDA’ contained some potential dangers for the unwary, including a definition of confidential information that was limited to documents marked ‘Strictly Confidential’, or to oral disclosures set down in documents marked ‘Strictly Confidential’ within 10 days of the disclosure. Unless employees are informed of this requirement, and reminded frequently of it, the risk is especially high that information disclosed orally might not be protected under the confidentiality clause.
Free NDA #3: “The Fudge”
Each fudge lover has their favourite flavour…chocolate, butterscotch, vanilla, maple…but in this box of chocolates, the fudge experience is inconsistent because some identical looking fudge squares are chocolate, some butterscotch, some maple… There is no predicting what you will get. The ‘Fudge NDA’ had several clauses dealing with disclosure to representatives, and each one was slightly different and slightly inconsistent with the others.
For example, one clause permitted disclosure to representatives only on a ’strictly need to know’ basis; another clause permitted disclosure to representatives with no restrictions; a third clause permitted disclosure to representatives only after obtaining written permission.
While it could be possible to read these clauses together, it is important for a recipient of confidential information to be very clear which representatives can have access to that information without risking a possible breach of the NDA, or resorting to a severability clause in a later dispute.
Conclusion
Just as experience teaches chocolate lovers what to expect from a box of chocolates, so it is that experience enables lawyers to assess whether an NDA is suitable for your particular situation. Without carefully reading and researching your documents, the ‘free internet contract’ might not be a good choice.
Takeaways:
- Free internet contracts might not be suitable for your situation
- Be wary of relying on titles or clause headings – they may not be accurate
- Pay close attention to the definition of confidential information
- Be wary of including multiple clauses that deal with the same topic
- Carefully read the agreement! Read every word! Research the clauses by researching blogs, case law and asking your advisers.
- Tools like our beloved Clausehound.com will assist you to understand clauses with our Learning materials
- Our Drafting Playbooks will allow you to interact with research materials and collect your notes prior to discussions with your advisors, business partners or legal counsel.
- Don’t be shy about asking your counsel when you are stuck.