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Non-Disclosure Agreements (NDA): German Contract Lawyers

When a company cooperates with a supplier, its own employees, investors, freelancers and other companies or parties, sensitive information and business secrets are often exchanged or disclosed. This exchange can already take place when two parties initiate a contract. However, it is essential for a company to preserve information and be treated confidentially by a contractual partner. Therefore, non-disclosure agreements (NDA) are necessary for ensuring the confidentiality of information that is not to be made accessible to the public.

In the following article, we explain what non-disclosure agreements are, when and how they are used, what you should be aware of and what sanctions can be expected if a party breaches a non-disclosure agreement. The information given is of a general nature and is intended to provide an initial overview. Should you have any questions or require individual and personal legal advice, please contact the lawyers of Schlun & Elseven Rechtsanwälte. Our contract law practice group will be happy to advise and represent you. We will explain your options under German contract law and support you in implementing them. If necessary, we will also represent you in court.

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The Business Secrets Act (GeschGehG)

§ 2 No. 1 GeschGehG sets out what information constitutes a trade secret within the meaning of the said Act and is thus deemed to be particularly worthy of protection:

A trade secret is “[…] information

  1. (a) which is not generally known or readily accessible, either as a whole or in the precise arrangement and composition of its components, to persons in the circles which normally handle that type of information and is therefore of commercial value; and
  2. (b) which is subject to reasonable confidentiality measures under the circumstances by its rightful holder; and
  3. (c) for which there is a legitimate interest in secrecy […]”.

A confidentiality clause in a contract or reliance on the contractual partner’s intention to maintain secrecy is often not sufficient to obtain adequate protection. In order to secure its rights as well as to be able to establish a breach of duty (in case of a breach) and assert claims, companies are advised to have a non-disclosure agreement signed.


Protection through Non-Disclosure Agreements

The non-disclosure agreement (NDA) is a contract. It serves to protect confidential information. The parties declare to treat the information to be disclosed and made accessible on the basis of a cooperation as confidential and to maintain it. Since the exchange of internal and sensitive information is already possible during the initiation of a contract, NDAs are often drawn up and signed before a company negotiates a contract with its business partners.

There are two possible types of NDAs, the bilateral and the unilateral agreement. While the two-sided non-disclosure agreement obliges two parties to maintain confidentiality, the one-sided non-disclosure agreement only instructs one party to keep the information confidential. Whether the bilateral or the unilateral agreement is more appropriate depends on your business plan. We will be happy to advise you in this regard. Please contact our law firm today using the online form below for further advice on non-disclosure agreements in Germany.


Content of Non-Disclosure Agreements

Since a non-disclosure agreement is free of contract, the parties are free to draft it as they wish. Nevertheless, it is advisable to define or stipulate some points clearly.

First of all, non-disclosure agreements should state which agreement binds parties and why the parties need such an agreement. The latter means stating the nature and scope of the cooperation. The agreement should also specify what information is considered confidential. To determine this more precisely, the information meant can be named specifically. It is also advisable to mark information that is not to be treated as confidential as such. Finally, contract duration and penalty can be specified.

Confidential Information within Non-Disclosure Agreements

The non-disclosure agreement specifies which information is to be treated confidentially. On the other hand, the agreement may specify what information is not covered. This non-confidential information includes, among others, information that is already known and information disclosed due to a requirement or similar. It should be noted that the definition of “confidential information” must not be too narrow but also not too broad. Otherwise, gaps in the contract could arise.

Furthermore, it must be determined how the exchange of information is to be handled and to what extent the information made available to the contractual partner may be used. It is possible, for example, to precisely determine the employees who have access to the information to be protected. In the course of this, different levels of confidentiality are often defined, which indicate which information may or may not be disclosed to which party.

We also recommend that you determine how the information is handled after the contractual relationship has ended. We will be happy to support and advise you in this regard. Don’t hesitate to get in touch with us by e-mail or by using the online form below.


Breach of Non-Disclosure Agreements

If a trade secret has been violated, this can be punished as a criminal offence or with a fine. The breach of the non-disclosure agreement may also give rise to a claim for damages. However, this is often difficult. In the event of a dispute, the claim would have to be enforced in court. It is therefore highly advisable to stipulate a contractual penalty.

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Please use the form on the right to inform us about your concerns regarding non-disclosure agreements in Germany. After receiving your request, we will make a short preliminary assessment on the basis of the information provided and give you a cost estimation. You are then free to decide whether you want to instruct our contract lawyers.