Written by
Ilyas Omari
Reviewed by
Protecting confidential information is crucial for any business, especially when it comes to sensitive material such as trade secrets, client information, or intellectual property.
Non-Disclosure Agreements (NDAs) are crucial legal documents that protect sensitive information and prevent its unauthorised use or disclosure.
A common question that is asked is, ‘How long does an NDA last’?
In this article, we’ll explain how long an NDA can last, what an NDA is, what’s included in an NDA, and answers to other frequently asked questions.
Read along!
What is a Non-Disclosure agreement?
According to the Australian Government’s IP Australia, a non-disclosure agreement (NDA), also known as a confidentiality agreement, is a legally binding contract that can be used for the purpose of protecting sensitive information that’s required to be disclosed to other parties.
NDAs are one of the most common and effective documents businesses can use to safeguard confidential information. An NDA will protect your interests by protecting your information. NDAs come in the form of an agreement or deed, where one or both parties promise to abide by its terms.
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How long does an NDA last?
According to the Australian Government’s IP Australia, an NDA can last forever.
For example, there is an NDA that is used to protect the Coca-Cola recipe, and it has been protected through secrecy measures for over 100 years.
What factors influence how long an NDA lasts?
When it comes to the length of time an NDA lasts, the answer can vary depending on several factors.
In Australia, NDAs can be subject to different rules and regulations, which can make it challenging to determine how long they’re enforceable.
What is the term of the agreement in an NDA?
The term of the NDA indicates how long the NDA will remain in effect.
Typically, the standard use for NDAs ranges from one to five years. However, this all depends on the nature of the transaction or market conditions.
As an employer or business owner, it’s in your best interest to enforce an NDA for as long as possible. Signatories to your NDA generally prefer for the document to expire at some point. For this reason, it is rare to see NDAs operating indefinitely as it unfairly prejudices the contracting party.
Ideally, NDAs will cover an appropriate amount of time to protect the disclosing party’s interests. Having a reasonable time frame for your NDA is especially important if a dispute arises. This is because courts look to the period, reasonableness, and impact on the receiving party in making their decision.
What are termination terms in an NDA?
If a time frame is not specified in the agreement, the parties may infer that the NDA will be in effect indefinitely
Failure to include this term is not uncommon and frequently occurs when the agreement is based on an ongoing relationship. Although, most NDAs will expire after some point, usually upon agreement of the parties.
Termination terms are beneficial for employers and employees as shared confidential information progressively loses its value over time. It may be wise as an employee to assess how the length of duration may affect you and your future.
You should be mindful of the specific terms of the agreement. According to the terms, information received after a certain date or event has passed may not be confidential information, even if the NDA has a survival clause.
Let’s say you sign an NDA during the course of employment, but after leaving the job, the NDA continues to apply for a certain amount of time (e.g. 1-year post-employment). While you are bound by this ongoing obligation, it is unlikely that the NDA will bind you to keep confidential any information you learn after leaving your position.
It is important to note that, even if you manage to have an NDA with an indefinite time frame, once the information becomes public, its confidentiality is lost.
What happens when the NDA contract expires?
The most effective NDAs will account for what happens after the term of the contract expires.
Typically, it will provide that even if the term has ended, certain intellectual property obligations will continue to apply. The primary rights will generally extend to the employer (or the one aiming to protect the confidential information).
How long does it take for an NDA to expire?
When an NDA expires is determined by the expiration date that’s included within the agreement.
If there is no expiration date specified in an NDA, the parties of an NDA may infer that the NDA will last indefinitely.
When should you use an NDA?
If you want to keep your information confidential, have parties sign an NDA before you provide them with information or display any of the following:
- Software
- Trade secrets
- Intellectual property
- Business methods or processes
- Business plans
- Marketing plans
- Inventions
- Plant breeding secrets
- Research information
- Customer information
- Financial information
- Employee information
- Intellectual property
- Concepts
- Inventions
- Designs
- Marketing strategies
- Recipes
- Ideas
Who should you use an NDA with?
You should use an NDA when dealing with the following people:
- Contractors
- Employees
- Accountants
- Distributors
- Investors
- Financial advisors
- Manufacturers
- Business advisors
- Marketing firms
- Stockists
- PR firms
- New owners when IP is transferred
- Graphic designers
- Industrial designers
- Potential business partners
Frequently Asked Questions(FAQs)
What’s the longest an NDA can last?
An NDA can last indefinitely if there is no end date included within the agreement.
Is a 5-year NDA normal?
A 5-year NDA would be considered typical.
What is an NDA expiration clause?
An NDA expiration clause is a term included in an NDA specifying the duration of the agreement.
It sets a time limit for how long the recipient of confidential information is obligated to keep that information confidential. Once the expiration period has ended, the recipient is no longer bound by the terms of the NDA and may disclose confidential information.
The expiration clause typically includes a specific time period, which can vary depending on the nature of the confidential information and the purpose of the NDA. Some NDAs may have an expiration clause that lasts for a certain number of years after the agreement is signed, while others may specify an expiration date. In some cases, an NDA may have no expiration date, and the confidential information must be kept secret indefinitely.
It’s important to note that even if an NDA has expired, the recipient may still have obligations to maintain confidentiality under other laws or agreements. Additionally, if the confidential information has become public knowledge or is no longer considered confidential, the recipient may no longer be required to keep it confidential, even if the NDA has not expired.
Do NDAs hold up in Australian courts?
Non-disclosure agreements (NDAs) can be enforceable in Australian courts, but there are several factors that can affect whether an NDA will hold up in court
As NDAs are contracts used to protect confidential information, they can be enforced like any other contract. However, there are some limitations to their enforceability. For example, an NDA can’t be used to prevent someone from reporting illegal activities or regulatory breaches to authorities.
Furthermore, courts can invalidate an NDA they find to be unconscionable, unreasonable, or against public policy. For example, if the terms of the NDA are too broad, if they unfairly disadvantage one party, or if they go against the public interest, a court may refuse to enforce them.
It’s important to note that the interpretation and enforceability of NDAs will depend on the facts and circumstances of each case.
Does an NDA have to expire?
An NDA doesn’t have to expire, as it can last indefinitely.
Conclusion
Ultimately, how long an NDA lasts can vary based on several factors, including the terms specified in the agreement and the laws of the jurisdiction enforcing it. In other instances, an NDA can last for as long as the confidential information remains confidential or indefinitely if the NDA states there isn’t an expiration date or if there is no mention of when the NDA expires.
It’s important to note that the terms of an NDA should be carefully drafted, considering the nature of the information, the parties involved, and the industry involved. If you need help with drafting your NDA, you should hire a lawyer for legal advice. A lawyer can help ensure that the interests of all parties involved are adequately addressed.
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