CHAPTER 7
Confidentiality Agreements ONCE A POTENTIAL JV PARTNER HAS BEEN SELECTED,
the next step is to establish a process for exchanging the technical and business information necessary for the parties to determine if there is actually a basis for a relationship. The exchange of information allows each party to evaluate its prospective partner and to find out their potential compatibility, respective functional strengths and weaknesses, and respective management structures and ideologies, with a view to deciding whether these various factors are or can be made complementary. No information regarding the proposed JV or the current operations of either of the parties should be exchanged before the parties enter into an appropriate agreement to preserve the confidentiality of sensitive technical or business information and to restrict the disclosure of the information. These confidentiality and nondisclosure agreements can take a variety of forms, ranging from simple one page letters to long and elaborate documents, which themselves require a good deal of negotiation. The effort spent on preparing a confidentiality and nondisclosure agreement will depend on the scope of information to be disclosed and its importance to each of the parties, as well as relevant common and statutory law protections for trade secrets and confidential information. In all cases, the agreement should be executed before the initial exchange of information between the parties. In most cases, disclosures made during the negotiation of the terms of a potential business relationship will be protected by the agreement, as will information discovered by any party during the pre-contract, due diligence investigation period. If the parties reach agreement on the terms of a formal JV, the JV agreement will either incorporate the terms of the pre-existing confidentiality agreement or will include new provisions covering the information disclosed prior to formation of the JV as well as during its operation.
Sample Contract: Nondisclosure Agreement This Agreement is made as of [date], between [name of first party] [a/an] [specify e.g., individual residing in (country) or corporation or other type of entity organized and existing under the laws of (state and/or country)] (hereinafter the “First Party”) and [name of second party] [a/an] [specify e.g., individual residing in (country) or corporation or other type of entity organized and existing under the laws of (state and/ or country)] (hereinafter the “Second Party”). The First and Second Parties are each referred to herein as a “Party” or the “Parties” whenever a term or condition applies to either or both of them, respectively. A Party that is disclosing “Confidential Information” (as defined subsequently) is referred to herein as a “Disclosing Party”, and a Party receiving such Confidential Information is referred to herein as a “Receiving Party.” C O M M E N T : The parties to the agreement should be clearly identified. If disclosures
are to be made by or to a subsidiary or affiliate of one party, the identification should be extended to include that additional entity. It is also important to give
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