Tennessee NDA Template
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A Tennessee NDA, or “nondisclosure agreement,” is effectively a legal agreement between two or more participants. It works as a guide, outlining which pieces of intel you or the other party should keep on the down-low. NDAs are a mighty tool that startups and businesses utilize as a preventative measure in case team members or potential partners might reveal the organization's privileged data. These agreements act like your business's best friend, safeguarding details that give your enterprise its unique edge. Think valuable factors such as trade secrets, your strategic game plan, or even your heartfelt-earned client roster - an NDA keeps these treasures from making an undesired public debut or landing on a competitor's lap.
Trade Secret Definition in Tennessee
“Trade secret” means information, without regard to form, including, but not limited to, technical, nontechnical or financial data, a formula, pattern, compilation, program, device, method, technique, process, or plan that:
(A) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and
(B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Tennessee Uniform Trade Secrets Act § 47-25-1702(4))
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Read on to learn more about Tennessee NDAs, including:
What's included in a Tennessee NDA?
Here are some key components that are typically included in a Tennessee Nondisclosure Agreement:
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Disclosing and Receiving Party
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Definition of Confidential Information
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NDA Purpose
- Use of Confidential Information
- Limited Access to Confidential Information
- Exclusions - What's not Covered
- Term of Confidentiality Period
1. Disclosing and Receiving Party
In the world of Non-Disclosure Agreements (NDAs), terms can sometimes get a bit confusing. For the segment labeled "Disclosing and Receiving Party," the disclosing party refers to the one sharing the sensitive information. Conversely, the receiving party is the one given access to that confidential information. Keep in mind this only applies for one-sided NDAs - in mutual NDAs, both entities are simultaneously disclosing and receiving. When mentioning "Company Name" versus "individual," remember to just use your personal name if you're an individual either sharing or obtaining confidential details and not representing a company.
This nondisclosure agreement (this “Agreement”) is dated [Date] (the “Effective Date”) and is between [Company Name of Disclosing Party; e.g. “Max Studios, LLC”; if you do not have a formal legal entity, use your legal name, e.g. “Max Smith”], (the “Company”), and [Company Name of Receiving Party; if receiving party does not have a formal legal entity, use their legal name] (the “Recipient”).
2. Definition of Confidential Information
When preparing your NDA, you need to spell out which information you’re classifying as “confidential”. This makes sense because imagine a situation where a boss tells his employee, "Every single thing I share with you for the next two years is private." Fast forward a year, and the same employee resigns after the boss mentions he predicts the next day will bring rain. Later that evening, the employee remarks to a mutual acquaintance that it's supposed to rain tomorrow. Has the employee disclosed confidential data? Certainly not!
No court would ever enforce a confidentiality clause with such sweeping scope. However, a too-narrow definition could lead to accidental exposure of private info by the receiving party who can then divulge it to anyone.
The majority of businesses adopt a common standard, such as the one in the provided template, but if you're uncertain, don't hesitate to dive into our more detailed article about defining confidential data in your NDA.
“Confidential Information” means any information that is proprietary or unique to the Company and that is disclosed by the Company to the Recipient during the term of this Agreement, including the following: trade secret information; matters of a technical nature such as processes, devices, techniques, data and formulas, research subjects and results; marketing methods; plans and strategies; information about operations, products, services, revenues, expenses, profits, sales, key personnel, customers, suppliers, and pricing policies; and any information concerning the marketing and other business affairs and methods of the Company which is not readily available to the public. “Confidential Information” also includes information of others that (1) is disclosed under this Agreement, (2) the Company is obligated to protect from disclosure or restricted from using or both, and (3) that would constitute “Confidential Information” if the information belonged to the Company.
3. NDA Purpose
One thing you'll notice in any NDA, including our template, is a section where you need to indicate the “purpose” of the NDA. You'll perhaps note it's "to create a prototype product for the disclosing party", or "to assess the potential business partnership between both parties." The purpose assumes significance because it signals why the recipient of the confidential details can use the data.
For instance, say you're planning to engage a programmer to assist in developing your company's website. You furnish him with your business strategies so he comprehends the kind of website he should construct. In such a case, you need to precisely state the purpose that resonates with the “working on..." and then spell out precisely what areas of the website the developer will be creating.
If you skip specifying the purpose, the developer might misuse the confidential data to replicate a similar business and generate profits from your trade secrets.
In the majority of situations, however, the standard language in the template ("estimating the parties' capacity for pursuing one or more business opportunities") should suffice.
Here's how to frame a basic purpose description.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
Your application of the confidential information aligns with your motive for signing an NDA. This clause essentially stipulates that the confidential data will only be applied for that purpose. Although this might appear self-evident, consider a different scenario where someone takes undue advantage of the confidential details to leverage the company. This clause fortifies that sensitive chats remain confidential, preserving both entities from possible external disruptions or harm.
The Recipient shall use Confidential Information only for the Purpose. Unless otherwise agreed in writing, neither party shall disclose to a third party the fact that discussions or negotiations are taking place concerning the Purpose or any of the terms or other facts relating to the Purpose, including the status of negotiations between the parties.
5. Limited Access to Confidential Information
When you offer your data to the "Recipient," what would happen if the recipient happens to be a company? Or suppose the recipient needs to consult some details with his legal advisor? Such potential issues are resolved in the 'Limited Access' segment of your NDA.
In most situations, the phrasing in the provided template is appropriate. However, as a rule, consider who needs access to this information, and restrict its application to those individuals. Whomever the recipient discloses the information to, it's crucial that the recipient ensures that individual also signs an NDA accepting the same requisites.
The Recipient shall protect the Confidential Information from unauthorized use and disclosure using the same degree of care that it uses with respect to its own information of like importance, but no less than a reasonable degree of care. The Recipient shall retain the Confidential Information in confidence and shall not disclose Confidential Information to any third party without the Company’s prior written consent. However, the Recipient may disclose the Confidential Information to employees, contractors, consultants, and authorized representatives of the Recipient who (1) require access to the information for the Purpose, (2) are informed by the Recipient of the Recipient’s obligations under this Agreement, and (3) are bound by contract or fiduciary duty to obligations of confidentiality and use restrictions with substantially similar function, purpose, scope, and effect to those of this Agreement and that are at least as protective of the Confidential Information as this Agreement.
6. Exclusions - What's not Covered
The subsequent segment of your NDA refers to “exemptions.” You require these exceptions to enhance your NDA's enforceability in court (should it come to that). The only clause worth considering for removal is 4(a)(1) -- and only in the event that you've already disclosed confidential details to the recipient. Otherwise, in most situations, these exemptions should be adequate as is.
(a) This Agreement imposes no obligations upon the Recipient with respect to Confidential Information that: (1) was known to the Recipient before disclosure by the Company as evidenced by contemporaneous records; (2) has become publicly available through no fault of the Recipient; (3) is disclosed to the Recipient by a third party that has the right to make the disclosure to the Recipient and that does not have any obligation of confidentiality with respect to the Confidential Information; or (4) is disclosed by the Recipient with the Company’s prior written consent.
(b) If the Recipient is required by any governmental agency, court, or other judicial or regulatory body to provide any Confidential Information received under this Agreement, then the Recipient will not be deemed to be in violation of this Agreement for the disclosure if the Recipient promptly gives written notice to the Company of the requirement to provide the Confidential Information and cooperates with the Company so that the Company may contest the requirement to provide the Confidential Information. The Recipient may disclose only that portion of the Confidential Information that it is legally required to furnish.
7. Term of Confidentiality Period
Another crucial aspect of your NDA is the confidentiality term, which dictates the duration of its effectiveness. The NDA may apply to one specific transaction that lasts for only a few days, or it could be indefinite. You should choose a time frame that encompasses the expected relationship or transaction. Often, an NDA's duration extends beyond the particular transaction or relationship, especially for as long as the trade secret remains a secret.
It's a good idea to include a provision that clearly states the trade secret must continue to be protected even after the business relationship or other contractual agreements have ended. If you're unsure about how long the confidentiality period should be, the typical time frame ranges from one to five years. Keep in mind that the duration should be as long as you need the information to remain confidential.
This Agreement will continue for a period of one year from the Effective Date unless: (1) terminated earlier by either party upon written notice to the other; (2) extended by the mutual written agreement of the parties; or (3) superseded by a subsequent written agreement that explicitly sets forth the obligations of the parties with respect to Confidential Information. With respect to business information, the Recipient’s obligations of confidentiality and non-use under this Agreement will expire three years from the termination of this Agreement. With respect to all information that constitutes a trade secret, the Recipient’s obligations of confidentiality and non-use under this Agreement will survive the termination of this Agreement for as long as such information remains a trade secret under applicable law.
What happens if I've already disclosed confidential information?
In case you've already disclosed your confidential information to the other party, there's no need to worry. A few adjustments to the template can accommodate such a situation, and we'll guide you on how to do that.
How do I protect my trade secret?
The main reason you use NDAs is to protect your confidential data. However, the value of confidential information lies in being part of the trade secret equation. To be valuable, the information must qualify as a trade secret. If you're unfamiliar with what constitutes a trade secret or whether your information classifies as such or even how to appropriately safeguard your trade secret, feel free to refer to our comprehensive guide on this subject.