No Obligation
NDA
Table of Contents:
Right to Walk Away
Inapplicable Actions
No Obligation
Right to Walk Away
Because an NDA is usually a preliminary document, i.e., a document which is the first (or one of the first) to be signed by the parties as part of the process for defining and developing the legal and commercial relationship between the parties, it may be important to reserve in an NDA the “right to walk away” from the relationship, free from any on-going obligation and without incurring any costs, penalty, or other liability.
The following exemplar includes such “walk away” language:
Exemplar N17-1
Each receiving party acknowledges that the disclosing party’s Information is the confidential and proprietary information and property of the disclosing party, and that the receiving party does not have, and nothing herein shall be construed to imply, any claim, right, title, property or other interest or license of any kind or nature in the Information. The receiving party shall hold and maintain the Information in confidence and trust for the sole and exclusive benefit of the disclosing party, and shall not use the Information for its own benefit or for the benefit of any third party. Nothing herein shall be deemed to obligate either party to purchase any goods or services from the other, or to enter into a further relationship with the other party.
The following exemplar contains more fulsome language allowing either party to walk away without any obligation or liability:
Exemplar N17-2
Unless and until a Definitive Agreement has been so executed and delivered, neither Party nor any of its Representatives has any legal obligation of any kind to the other Party with respect to the Discussions, whether because of this Agreement or any other written or oral expression with respect to the Discussions or otherwise, except for the matters specifically agreed to herein. The Parties acknowledge and agree that each Party reserves the right in its sole discretion to reject any and all proposals made to the other Party and to terminate the Discussions at any time and for any or no reason. Neither Party will have (and both Parties hereby irrevocably waive) any claims against the other Party or any of its Representatives arising out of or relating to the Discussions, except for those claims, if any, a Party may have in connection with (i) the matters specifically agreed to herein, or (ii) any Definitive Agreement subsequently entered into by the Parties and then only in accordance with the terms hereof.
Inapplicable Actions
For avoidance of doubt, and out of an abundance of caution, the parties may desire to acknowledge that by entering an NDA, the parties do not agree to any of the following actions:
Exemplar N17-3
Nothing in this Agreement:
(a) grants the receiving party any right or license under any intellectual property right owned or controlled by the disclosing party;
(b) obligates either party to disclose or receive any information, perform any work, or enter into any business relationship;
(c) prevents either party from developing, marketing or selling products or services that may be competitive with those of the other party;
(d) limits either party from assigning or reassigning its employees in any way;
(e) authorizes either party to speak on behalf of the other; or
(f) restricts either party from entering into any business relationship with any other party.
The parties acknowledge that any limitations on the parties in their respective rights to enter into transactions with third parties, where such transactions are similar to any transaction discussed with each other, shall be addressed only via restrictive covenants in the definitive agreement(s) between Company and Supplier executed in furtherance of effectuating such transaction and that any such limitations shall, in no way, arise from this Agreement.