Q: I don't understand specific language in an NDA I'm being asked to sign. Can you help? (See More Information section)
A company wants me to sign an NDA before I submit a product idea to them (I'm a Product Developer). I'm not clear on what this means and it concerns me a bit: "Each party hereby expressly acknowledges and agrees that any failure to comply with the provisions of this AGREEMENT will cause irreparable harm and damage to the other party for which the other party will have no adequate remedy at law. Each party further agrees that it shall not raise the repairability of harm or the adequacy of a remedy at law as a defense to any action brought by the other party to enjoin the use of the Idea or to obtain other equitable legal relief." What is this actually saying? Am I basically agreeing to not sue them for any reason--or what exactly does this mean?
A: I am not licensed in Montana but that looks like an injunctive relief provision. Whenever a breach of contract causes what we call “irreparable harm,” a party may try to get an injunction or other equitable relief. Many people put that provision into an NDA to be able to more easily get an injunction if the other party breaches the NDA. If you’re not comfortable with a contract provision, you should consult with an attorney so that you have a full understanding of what you’re agreeing to.
I agree that you need to have the entire agreement looked at by an attorney that is familiar with NDA agreements. Sometimes there can be interplays between a definition on one page and a section on another page so providing advice on a snippet of the agreement can lead to trouble.
Given that you are the disclosing party, this provision seems a bit heavy handed. You may want to look to see if this company has a reputation of locking people into agreements as they claim that once the company "discloses" something (maybe pricing) that you cannot continue to shop your idea to other companies.
You may want to file a patent application before you talk to these people to benchmark what the level of development was before you talked to them so that they do not later claim to be a co-inventor of your base idea.
I hope that this helps.
Kevin E Flynn
Robyn T. Williams agrees with this answer
To expand upon my suggestion that you should talk with an attorney familiar with NDA agreements -- I would check in with Montana's Small Business Development Center. https://sbdc.mt.gov/
In most states these centers provide free advice to local people looking to start or expand a business. They should be able to connect you with an attorney that is both familiar with NDAs and able to provide advice to a client that won't immediately be a large client.
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