China non-disclosure agreement (NDA)
Add on 22.10.2016

A non-disclosure agreement (NDA), also known as a confidentiality agreement, is a legally binding contract between two or more parties that outlines how confidential information is to be handled. Typically an NDA will stipulate that information handed over from one party to another can only be used for certain pre-defined purposes and will restrict who can have access to that information. In short, an NDA is the most effective legal mechanism we have for assuring that your sensitive information stays out of the wrong hands. 

NDAs are commonly signed when two companies or individuals are considering doing business and need to understand the processes used in each others organization for the purpose of evaluating the potential business relationship. NDAs can be "mutual", meaning both parties are restricted in their use of the materials provided, or they can restrict the use of material by a single party. The great advantage of a unilateral NDA is that it places no legal obligations on one party, usually the party that is disclosing the sensitive information. This is the ideal situation for the disclosing party - all the benefit but none of the obligations - but it is not always a simple task to get the receiving party to agree to this somewhat onerous terms.

The best way to understand an NDA is to go through a few typical provisions:
  1. The parties to the agreement (name, address, other identifying information);
  2. the definition of what is confidential, which typically takes the form of a long list of items (i.e.: financial information, customer lists, etc.) and a catch-all phrase to cover anything that’s not explicitly mentioned;
  3. the exclusions from what must be kept confidential;
  4. the term of the confidentiality;
  5. the law and jurisdiction governing the parties.

the recipients obligations with regard to the confidential information, typically: 

  1.   restricting its use to approved purposes only;
  2.   to disclose it only to persons with a need to know the information for those purposes;
  3.   to use all reasonable efforts to keep the information confidential;
  4.   to ensure that anyone else using the information abides by the obligations set out in the NDA; and
  5.   types of permissible disclosure - such as those required by a court order.

Generally speaking, NDAs for use in China should be bilingual (English and Chinese) and be governed by Chinese law. An NDA is an important legal document and it should be drafted with care and attention to detail. For this reason, we always suggest you hire a Chinese lawyer to draft your NDA and related legal documents.

For comprehensive legal assistance on NDAs and other Chinese legal documents, feel free to get in touch with Flora by email.

NDA Business

A few words about Flora

Flora Huang is a leading Chinese lawyer specializing in corporate and commercial law, international family law and expat divorce. A pioneer in many aspects of transnational legal practice, Flora has served as a China legal commentator in both local and international media and acted as an expert witness in countless international legal proceedings.

Fluent in English and familiar with most major legal systems, Ms. Huang has built-up an enviable network of contacts around the world to ensure that business decisions, litigation, and transactions are informed by up-to-date advice from experienced practitioners wherever the client is or wants to be.

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