What is the difference between a Non Disclosure Agreement and a Non Disclosure Deed?
Non Disclosure Agreement, Non Disclosure Deed, NDA, Confidentiality Agreement and Confidentiality Deed are all terms often thrown around relating to the same document. That is a document entered into by parties who wish to share confidential information and limit its use to a particular purpose. Often that purpose is to consider whether the parties will enter into a subsequent contract.
For a validly binding contract there typically needs to be three elements:
- offer and acceptance;
- consideration; and
- an intention to form a legally binding agreement.
While these are the basic elements often these are extended to include others such as certainty and capacity to consent. However, for this purpose we only need to consider the basics and more importantly the concept of consideration.
What is consideration?
Consideration is defined as the promise, price, detriment or forbearance given as value for a promise. Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd  AC 847. A promise is generally only binding if the promise is supported by consideration. Woolworths Ltd v Kelly (1991) 22 NSWLR 189. Arguably the opportunity to enter into a future agreement is a form of consideration and therefore a Non Disclosure Agreement may be binding.
May be binding! But as the old saying goes, the only people who win out of a legal dispute are the lawyers. So why take the risk with a ‘may’ be binding. Typically, I draft Non Disclosure Agreements as Deeds.
What is a Deed?
A deed is similar to an agreement. However, it does not require consideration. A deed has been defined as an instrument that has been signed, sealed and delivered, and passes an interest, right, or property, creates an obligation binding on some person, or is an affirmation or confirmation of something that passes an interest, right or property. R v Morton (1873) LR 2 CCR 22.
Unlike contracts deeds have some formalities.
Where can I get a Non Disclosure Deed?
Searching the internet will produce a wide array of free Non Disclosure Deeds or Non Disclosure Deed templates. However, use them at your own peril. Many of these have been modified by people who are not lawyers and are designed for different states or different countries.
The Property Law Act 1974 (Qld) contains formalities for deeds executed by individuals at section 45. It states:
45 Formalities of deeds executed by individuals
(1) Where an individual executes a deed, the individual shall either sign or place the individual’s mark upon the same and sealing alone shall not be sufficient.
(2) An instrument expressed—
(a) to be an indenture or a deed; or
(b) to be sealed;
shall, if it is signed and attested by at least 1 witness not being a party to the instrument, be deemed to be sealed and, subject to section 47 , to have been duly executed.
The rules are slightly different for companies and set out at section 46.
The take away message here is talk to a lawyer and obtain the appropriate confidentiality document for your purposes.
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Commercial, Corporate and Technology Lawyer
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