A Software Development Agreement governs custom software creation, specifying scope, milestones, and IP ownership. This playbook highlights negotiation on deliverables, acceptance testing, and post-delivery warranties.
Why This Matters: Leakage of trade secrets or sensitive business information can erode competitive advantage and lead to significant financial and reputational harm.
Negotiation strategy
If you're the Company:
Ensure the confidentiality clause is comprehensive, covering all forms of information and including clear obligations for return or destruction of information post-contract.
If you're the Developer:
Negotiate for reasonable carve-outs and ensure that the obligations do not unduly restrict the contractor's ability to operate or use independently developed information.
Essential elements
1
Definition of Confidential Information
Defines what is considered confidential.
2
Obligations of Confidentiality
Outlines how information must be protected.
3
Permitted Disclosures
Specifies when disclosures are allowed.
Action framework
ACCEPT
Propose edits if the clause lacks clarity on the scope of confidential information or the duration of obligations.
EDIT
Reject if the clause imposes unreasonable restrictions or lacks mutual protections.
ADD
Add language to address specific industry standards or jurisdictional requirements.
PRO TIP
Always ensure that the confidentiality obligations are reciprocal and clearly define the scope and duration.
Example clauses
FAVORABLE
Comprehensive Confidentiality Clause
"Each party agrees to maintain the confidentiality of the other party's Confidential Information using at least the same degree of care that it uses to protect its own confidential information."
NEUTRAL
Standard Permitted Disclosures
"The receiving party may disclose Confidential Information to its employees, agents, or contractors who have a need to know such information."
UNFAVORABLE
Overly Broad Confidentiality Obligations
"The receiving party shall not disclose any information related to this Agreement to any third party under any circumstances."
Fallbacks
High-Risk Projects
In high-risk projects, confidentiality clauses should include enhanced protections and stricter disclosure limitations to mitigate potential damages.
Cross-Border Transactions
Consider jurisdictional differences in confidentiality laws and ensure compliance with international standards.
Technology Collaborations
In technology collaborations, ensure that the clause addresses IP rights and the handling of jointly developed information.
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