Non-Disclosure Agreements (NDA): Expiration Date

Nov 02, 2016

A non-disclosure agreement (NDA) could protect a company’s confidential and propriety information from misuse following a disclosure to a potential buyer or investor. There are different factors to consider in drafting or reviewing an NDA, and one’s perspective should depend on whether the agreement pertains to disclosure or receiving of confidential information.

NDAs can either be one-way or mutual. One-way NDAs are designed for instances where only one party is disclosing confidential information while mutual NDAs involve either individuals or companies that agree to share confidential information with one another to complete a transaction. 

Most NDAs terminate at some point. Parties may agree on a specific term depending on the nature of shared confidential information and on what each party considers valuable to its operations. It is also common for NDAs to be silent when it comes to duration. However, setting an expiration date can be an important term of the agreement. The time should be commensurate with the useful life of the confidential information.

While it may be helpful to set a specific term for an NDA’s duration, some agreements could be indefinite, but most of the shared confidential information becomes stale and useless. Therefore, it could be more beneficial and more reasonable for entrepreneurs to agree on a particular expiration date in finalizing an NDA.

To make sure that the terms and conditions of an NDA are appropriate for a business, entrepreneurs should carefully evaluate their goals before entering into an agreement. Setting the expiration date of an NDA depends on the safeguarding controls adopted for the organization. Consulting with an attorney familiar with the nuances of NDAs could further ensure that the terms and conditions of an agreement are appropriate for the company.

Heliane Fabian