Every person wants his business to grow leaps and bound but everyone not possess all skills or knowledge of every aspect of business, It may not be possible for an individual to carry out all sort of activities on his own. Sometimes, the work needs to be performed by some expert having expertise in particular domain. For Ex. Services of CA, CS, Lawyer, Website Developer, PR Marketing, Engineer etc. So, hiring of consultant to seek expert advice becomes need of the hour. However, in the recent time, it is being witnessed that hiring a consultant to work on certain project involves element of risk, if project has been assigned without having an enforceable confidentiality agreement. In absence of confidentiality agreement, consultant may use the information & documents shared by the client during the project for their own purpose without permission of client. It is very important to protect such information from being leaked out. Hence, client needs to enter into a Non Disclosure Agreement with the consultant/professional to safeguard all such business information shared with them during the validity of Non-Disclosure Agreement (NDA).

1. Non Disclosure Agreement
while approaching Consultant

2. Introduction !
▫ Every person wants his business to grow leaps and bound but everyone not possess all skills or
knowledge of every aspect of business, It may not be possible for an individual to carry out all sort of
activities on his own. Sometimes, the work needs to be performed by some expert having expertise in
particular domain. For Ex. Services of CA, CS, Lawyer, Website Developer, PR Marketing, Engineer etc.
▫ So, hiring of consultant to seek expert advice becomes need of the hour. However, in the recent time, it is
being witnessed that hiring a consultant to work on certain project involves element of risk, if project has
been assigned without having an enforceable confidentiality agreement.
▫ In absence of confidentiality agreement, consultant may use the information & documents shared by the
client during the project for their own purpose without permission of client.
▫ It is very important to protect such information from being leaked out. Hence, client needs to enter into a
Non Disclosure Agreement with the consultant/professional to safeguard all such business information
shared with them during the validity of Non-Disclosure Agreement (NDA).
2

3. Drafting Concern!
▫ It is being noticed that under the confidentiality Agreement, client wants to secure the information and
documents shared with the consultant. However, prima facie, it is known to the client that there would be
certain event when the consultant would require to disclose those information and/ or documents. For ex.
Information required to be disclosed in any legal matter wherein judicial authority may ask for disclosure
for those confidential information, however, in such a scenario, it is important for the consultant to
disclose the information only on “Need to Know” basis and no extra information to be disclosed.
▫ So while drafting a Non Disclosure Agreement it is important to make sure that it must be drafted in such
way that it can be legally enforceable under the court of law and only if the consultant would feel that
disclosure of such information become mandatory, then the same must be disclosed on need to know
basis.
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4. Suggested Confidentiality Clauses!
4
1. Define Confidential Information: This will cover those information, documents, paper etc. which would
be considered as a Confidential Information under the NDA. It needs to be detailed and exhaustive one
considering the nature of business and consultant with whom client is intending to enter into an
Agreement.
2. Usage of Confidential Information: It is important to set out the cases wherein the consultant would be
permitted to use the Confidential Information’s and it is also needs to be mentioned that other than the
consultant who will be authorised to use the information and what will be the manner of usage of such
Information.
3. Exception for Non-Disclosure: Sometime situation occurs that it become very essential for the
Consultant to disclose the information, in order to face whose situation, it is always suggested that there
must be some exemption from Non sharing of information’s like :

5. Suggested Confidentiality Clauses!
• is, at the time of disclosure, publicly known and made generally available in the public domain;
• becomes, at a date later than the time of disclosure, known to the trade or the public otherwise than a
wrongful act or negligence or breach of this Agreement of or by the Consultant;
• is known or possessed by Consultant free from any obligation of confidentiality, as evidenced by Consultant
written records immediately before receipt of the Confidential Information from client;
• is disclosed to Consultant in good faith by a third party and the Consultant was not aware that the third party
had a duty of confidentiality to client in respect of the information; or
• is independently developed by Consultant without use of or reference to client Confidential Information,
provided there must be some adequate documentation to confirm such independently development.
However, it is pertinent to note down that even in above cases, information and document needs to be shared on
“Need to Know” basis and prior intimation, if possible, needs to be given to the client by the consultant.
Cont.
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6. 6
Suggested Confidentiality Clauses!
4. Validity of the Agreement: The validity period for which the agreement shall stand in effect needs to be
defined specifically. This clause helps to determine the liability of the concerned in case there is breach of
any of the clause of the Agreement.
5. Ownership of Confidential Information: The client (Disclosing Party) shall be the sole owner of the
documents prepared/ acquired/ shared during the tenure of the Agreement.
“Clause for Instance: “Notwithstanding anything contrary contained in this Agreement, all Confidential
Information will remain the exclusive property of the Disclosing Party. The Disclosing Party’s disclosure of
Confidential Information will not constitute an express or implied grant to the Receiving Party of any rights to
or under the Disclosing Party’s patents, trademarks or other intellectual property rights. Except to the extent
permitted by applicable law in the absence of any express license or other grant of rights, neither party will
use any trade name, trademark, logo or any other proprietary rights of the other party (or any of its Affiliates)
in any manner without prior written authorization of such use by an authorized representative of such other
party.”
Cont.

7. 7
Suggested Confidentiality Clauses!
Cont.
6. Handover of Confidential Information: It is the responsibility of the Consultant to handover all the
confidential information which he has received while working during the agreement to the Client once the
agreement is terminated and work is over. Sometime, client may also urge for getting an undertaking from
the consultant that all the information’s has been returned and cancelled and destroyed and shall not be
used in any manner.
7. Indemnity Clause: The term Indemnity is defined under Section 124 of the Indian Contract Act, 1872
wherein it is stated that “A contract by which one party promises to save the other from loss caused to
him by the contract of the promisor himself, or by the conduct of any other person, is called a "contract of
indemnity".
Under the Confidentiality Agreement with the Consultant, Indemnity clause helps to protect the
Disclosing Party from the wrong doing of other Recipient Party under the Agreement. In case of breach of
duty on the part of each Party, the Party committing the default shall indemnify the other party and make
good the loss suffered.

8. 8
Suggested Confidentiality Clauses!
Cont.
8. Residual Clause: A Residual Clause is most of the time mentioned in the NDA which specify that if
during the period of an Agreement if one party learn something from other party which comes under
intangible form of information, then such person is free to use those information’s in a manner he/ she
wants.
There has been an argument in relation to residuals clause as it is very difficult to ascertain and keep is
separate from confidential information. Even after drafting a residual clause carefully in favour of
disclosing party in the Agreement, it is very difficult to mitigate the risk associated with it.
However, it would be suggestible to have below consideration while dealing with this clause:
• Make sure that such clause specifically exclude any license under the discloser’s patents and
copyrights;
• Such information shall apply only to recipient Unaided Memory without any reference to written
information;
• Such clause does not affect the prohibition on disclosure of information (For Instance: information
can be used for own purpose and not for third party)

9. 9
Suggested Confidentiality Clauses!
Cont.
9. Notice: The address of each party shall be stated wherein all the written communication including
notices are to be served.
10. Severability Clause: The clause is regarding severability of any clause of the agreement, which
becomes invalid, for the time being in force, is to be severed from the agreement in such a way that only
that clause becomes inoperative without affecting the entire agreement.
11. Bribery Clause: The Client shall not promote/ pursue any work by payment of bribe. Further Consultant
shall not do any act of bribe in order to take assignment from Client.
12. Representation and Warranties: The parties represent and warrant that they have been duly
authorised to sign and submit the necessary agreement and documents on behalf of the Parties.
13. Termination: Terms on which the agreement stands to be terminated shall be mentioned specifically in
the Agreement. Few Instance for the same are :

10. 10
Suggested Confidentiality Clauses!
Cont.
• on completion of service
• on expiry of the term
• continuous delay in completing the work etc
• misuse of information and records
• on breach of terms of the Agreement
Notice Period which needs to be given need to be mentioned.
14. Arbitration: In case of any dispute, the Parties can mutually agree to settle the dispute through
arbitration and same shall be carried out as per the provision of Arbitration and Conciliation Act, 1996
and amendment therein from time to time.
15. Jurisdiction: The agreement should define the jurisdiction of the Court which can be approached by the
Parties to the Agreement in case of any dispute arose.
As we all know that there can’t be “One Size Fits All” kind of Agreement for securing all kind of Confidential Information
and above clauses is only illustrative list not exhaustive and the same would also depend upon how a particular clause is
being crafted considering the nature of transaction. Majorly above clauses creates a significant impact on the agreement
and makes it more qualitative.

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