Purpose - OneNDA Provision

NDA Anatomy™ JC’s guide to non-standard confidentiality agreements. For the OneNDA, see the OneNDA Anatomy →Go uptown The OneNDA clause Purpose: “ ” view template Resources: Confidentiality agreement | Confi — Led Zeppelin style | GDPR | Copyright vs. confidence | OneNDA | Common terms | Certification | Confidential information | Confidentiality obligation | Derived information | Disclosed information | Discloser | Exclusivity | Indemnity | No licence | Non-solicitation | Permitted disclosees | Permitted disclosures | Procure compliance | Purpose | Receiver | Remedies | Reps and warranties | Return of information | Term of confidentiality | Index: Click ᐅ to expand: Confidentiality OneNDA Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

In the narrow sense of “the purpose we are sharing confidential information” — we imagine in furtherance of The Ultimate Purpose — and not The Ultimate Purpose itself, being the the meaning of life, the universe and everything for a commercial undertaking.

OneNDA discussion

Why are the parties sharing the information in the first place? Typically, you’ll want to restrict use of the information to matters relevant to the project. This is likely to be defined as the “Purpose” or the “Project”. Expect to see this kind of definition, and this is somewhere you can let your sales guy go wild.

“So, legal eagles, what should I put for the “Purpose”?”
“I dunno, you tell me. What is the purpose?”
“What?”
“...You know, the purpose that you want the confidential information.”
“Ohh, right. [Pause] Well, looking at a sample portfolio to put some pricing together with a view to pitching financial services, I suppose.”
“Okay, so put that.”
“What?”
“Put that.”
“Just, that?”
“Sure.”
“Like, “looking at a sample portfolio to put some pricing together with a view to pitching a PB service, I suppose”?”
“Well, I woudn’t put, “I suppose”. but otherwise, yes.”

Sales will go away happy, any quietly believing he could have been a lawyer. And you know what? He probably could have.

Take care to describe the purpose at least make it to clear. This does not require specific legal skill; a salesperson with a decent command of English should be able to manage it (indeed, many legal eagles have so curious a grip on English — like some kind of half-Nelson or choke-hold —that they can’t); just enough facility to be broad enough to capture all information flowing between the parties that reasonably relates to the secret undertaking, so that you know it will be kept quiet, but not so indeterminate that it could take in any kind of random information that happens to pass between the parties, whether related to the purpose or not, and whether commercially sensitive or not.

Once inked, legal eagles will obsess about the precise limits of the purpose. The question will arise, “I have this document; I should like to send it to this person, who has a good reason for wanting it. Is it within the scope of the purpose?”

To answer this question they will burrow deeply into drafting that was, we now know, dashed off rangily by someone in Sales. Unsatisfied, they will look further afield for help, soon getting themselves tangled up in the definition of “confidential information” — also a thing of some craftspersonship — the manifest exceptions, carve-outs and exclusions to it, and before long the winding path will lead them to the tentative conclusion that perhaps the litigation team might have a view, or even outside counsel?

The JC has a view that if you have to ask the litigation department if something’s okay, it is probably not okay. We get to that point on this line of reasoning: we are interpreting our rights and obligations under a legal contract with a (presumably) valuable customer. If we have in mind that a consequence of adopting our desired interpretation is (i) the customer might sue us, but (ii) after a full trial, we would win, then we are wildly missing the point: the primary mischief here is not losing in court, but being sued by a valuable customer. Customers who are actively pursuing you in court tend not to give you as much business as those who are not. To “ask litigation for a view” is to acknowledge that our customer might violently object to what we are proposing to do.

Here we call to attention our old friend the commercial imperative. Commerce is a long game, friends. There are very few cases where the short term benefit of winning on this point, now, outweighs the longer reward of ongoing revenue, gladly imparted, by a happy customer. They usually come about where customer is in the process of spiralling into the side of a hill. Usually, this does not happen in connection with an NDA.

No, friends: if you believe your customer might object to your proposed disclosure you have two options. This first — which you should not dismiss out of hand, even if someone in Sales now wants to — is to just not make the disclosure. In the long run, this is the better thing to do. The second — more likely where the proposed disclosure is to a regulator, or in the course of some legal process, where you are more or less compelled to disclose it — is to tell your client you have received a request, or command, to surrender the information, and that you propose to do so, on condition that the regulator treats it as confidential, and limiting and anonymising the information as best you can

See also

The Ultimate Purpose, being the reason any commercial undertaking exists.