A Mutual NDA establishes reciprocal obligations to protect proprietary and confidential information. This playbook addresses definition scope, duration, and permitted disclosure exceptions.
Why This Matters: A defined resolution path reduces uncertainty, limits legal costs, and preserves business continuity in the event of conflicts.
Negotiation strategy
If you're the Disclosing Party A:
Advocate for arbitration to ensure a private and potentially faster resolution process. Ensure the arbitration body and rules are favorable to your interests.
If you're the Disclosing Party B:
Push for litigation if you prefer a public forum and the possibility of appeal. Verify the jurisdiction is convenient and favorable.
Essential elements
1
Method of Resolution
Arbitration or litigation specified.
2
Venue Selection
Location for dispute resolution.
3
Cost Allocation
How costs are divided.
Action framework
ACCEPT
Propose edits if the method, rules, or venue are not specified or unfavorable.
EDIT
Reject if the clause lacks clarity or imposes unreasonable burdens.
ADD
Add language specifying arbitration as preferred, with litigation as fallback.
PRO TIP
Always ensure the dispute resolution method aligns with your company's risk tolerance and policy.
Example clauses
FAVORABLE
Clear Arbitration Clause
"All disputes shall be resolved by arbitration under the rules of the International Chamber of Commerce."
NEUTRAL
Basic Litigation Clause
"Disputes will be resolved in the courts of New York."
UNFAVORABLE
Ambiguous Resolution Clause
"Parties will resolve disputes as they see fit."
Fallbacks
High-Risk Projects
In high-risk projects, specify arbitration to ensure confidentiality and a quicker resolution process.
Cross-Border Transactions
For cross-border deals, choose arbitration to avoid jurisdictional issues and ensure enforceability.
Long-Term Contracts
In long-term contracts, consider a tiered approach starting with mediation, then arbitration or litigation.
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