NDAs: Permitted Recipients

Nov 09, 2016

Determining the scope of a non-disclosure agreement (NDA) includes specifying the permitted recipients of confidential information. Our business lawyers suggest that to maintain the protection of confidential information, the parties entering into an NDA should agree on which individuals, representatives, or entities are permitted to have access to the information.

Common permitted recipients are directors, employees, partners, accountants, and financial advisers. Depending on the parties’ discretion, the term may also include financing sources, subsidiaries, and affiliates. Generally, the receiving party has an obligation to ensure that all individuals or entities that are allowed to receive confidential information are informed of the security standards and terms agreed upon in the NDA. Furthermore, the receiving party is typically responsible for all unauthorized disclosures of its agents or representatives.

To prevent inadvertent disclosures and any potential breach of contract, an NDA should clearly establish all permitted recipients of confidential information. The scope of an NDA includes the extent of information that the parties would want to disclose, the list of individuals or agents that could access the information, and the overall goals of the transaction. Consulting with a business attorney could further ensure that the terms in an NDA are appropriate and aligned with the interests of the parties.

Heliane Fabian