Introduction

Non-Disclosure Agreements (NDAs) often contain clauses that regulate timeframes—but not all timeframes mean the same thing. A well-drafted NDA distinguishes between the term of the agreement (when confidential information may be exchanged) and the survival period of obligations (how long confidentiality duties last after the agreement ends).

1. The Term of the NDA

• Definition: The period during which the parties are permitted to disclose and receive confidential information under the agreement.
• Purpose: Sets a clear boundary for the business relationship. For example, an NDA may last for 2 years, during which the parties can share information about a potential joint venture.
• Key Point: Once the term expires, no new confidential information should be shared under that NDA. If the parties want to continue exchanging information, they must renew or sign a new agreement.

2. Surviving Obligations

• Definition: The confidentiality and non-use obligations that continue even after the NDA’s term has expired.
• Purpose: Protects sensitive information disclosed during the term from being misused later.
• Typical Duration: Often 3–5 years, but may be indefinite for trade secrets.
• Example: If an NDA expires after 2 years, but the survival clause requires confidentiality for 5 years, the recipient must still protect and refrain from using the information until that 5-year period ends.

3. Why the Distinction Matters

• Business Certainty: Parties know when they can share information and when they must stop.
• Risk Management: Ensures that obligations do not vanish the moment the NDA expires.
• Negotiation Leverage: Disclosing party may push for longer survival periods, while receiving party may argue for shorter ones to limit liability.

4. Drafting Tips

• Be Explicit: State both the term of the agreement and the survival period separately.
• Tailor to Information Type: Shorter survival for general business data, longer or indefinite survival for trade secrets.
• Avoid Ambiguity: Courts often enforce survival clauses strictly; unclear drafting can weaken protection.

Example Clause Structure

Term Clause:
“This Agreement shall commence on the Effective Date and continue for a period of two (2) years, during which the parties may disclose Confidential Information.”

Survival Clause:
“Notwithstanding expiration or termination of this Agreement, the Receiving Party’s obligations to maintain confidentiality and restrict use of Confidential Information shall survive for five (5) years from the date of disclosure, or indefinitely with respect to trade secrets.”

Conclusion

Understanding the difference between the NDA term and surviving obligations is crucial for effective confidentiality management. Clear drafting and tailored survival periods help protect sensitive information while providing business certainty and risk control.

Disclaimer: This practice note is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for advice specific to your situation.