Mutual NDA
A California-law mutual NDA template, narrowly drawn to respect California public policy on employee mobility.
California treats confidentiality agreements seriously, but it also imposes meaningful limits on how broadly a commercial agreement can restrain former employees or contractors. California public policy disfavours non-compete provisions in most contexts, and over-broad confidentiality clauses can run into the same concerns if they function as de facto non-competes.
A mutual NDA intended to be governed by California law should therefore be narrowly drawn: tightly defined confidential information, a specific permitted purpose, and a reasonable term. The California Uniform Trade Secrets Act also provides an independent layer of protection for genuine trade secrets, which the NDA can reference without trying to expand.
Required clauses for California
- Narrowly Defined Confidential Information
- California courts scrutinise overly broad definitions; keep this tight.
- Specific Permitted Purpose
- Be explicit and narrow about the purpose.
- Reasonable Term
- Two to three years is a common, conservative default.
- Trade Secret Reference
- Reference to California Uniform Trade Secrets Act as an independent layer.
- Governing Law — California
- Law of the State of California.
- No Non-Compete Effect
- Language confirming the NDA is not intended to restrain lawful competition.
Example contract
A hand-written illustrative example. Not a substitute for legal advice on your specific situation.
MUTUAL NON-DISCLOSURE AGREEMENT
This Mutual Non-Disclosure Agreement (the "Agreement") is entered into as of [Effective Date] by and between [Party A], a California corporation with its principal place of business at [address] ("Party A"), and [Party B], a [jurisdiction] [entity type] with its principal place of business at [address] ("Party B"). Each a "Party" and together the "Parties".
1. PURPOSE. The Parties wish to explore a potential business relationship (the "Purpose") and, in connection with that discussion, may disclose to each other certain non-public business, technical, and financial information.
2. CONFIDENTIAL INFORMATION. "Confidential Information" means any non-public information disclosed by one Party (the "Discloser") to the other (the "Recipient") that is marked or identified as confidential at the time of disclosure, or that a reasonable person would understand to be confidential given its nature and the circumstances of disclosure.
3. EXCLUSIONS. Confidential Information does not include information that: (a) is or becomes publicly available through no fault of the Recipient; (b) was lawfully known to the Recipient before receipt from the Discloser; (c) is independently developed by the Recipient without use of or reference to the Discloser's Confidential Information; or (d) is rightfully received from a third party who owes no duty of confidentiality.
4. OBLIGATIONS. The Recipient shall (a) use the Confidential Information solely for the Purpose; (b) protect it with at least the degree of care it uses for its own confidential information, and in no event less than reasonable care; and (c) limit access to its personnel and professional advisors who have a need to know and who are bound by written or professional obligations of confidentiality.
5. COMPELLED DISCLOSURE. If the Recipient is legally compelled to disclose Confidential Information, it shall, where legally permitted, provide prompt notice to the Discloser so that the Discloser may seek a protective order.
6. TERM. This Agreement will remain in effect for three (3) years from the Effective Date. The obligations of confidentiality will survive termination for a further two (2) years, and indefinitely as to any information that constitutes a trade secret under applicable law.
7. NO LICENSE. Nothing in this Agreement grants the Recipient any license or other rights in the Discloser's Confidential Information or intellectual property, except the limited right to use it for the Purpose.
8. NO WARRANTY. All Confidential Information is provided "AS IS". Neither Party makes any warranty as to the accuracy or completeness of Confidential Information.
9. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of laws principles.
10. JURISDICTION. The Parties submit to the exclusive jurisdiction of the state and federal courts located in the County of San Francisco, State of California for any dispute arising out of or relating to this Agreement.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the Parties with respect to its subject matter and supersedes all prior discussions and writings.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
Frequently asked questions
- Can a California NDA include a non-compete?
- No. California public policy strongly disfavours non-compete provisions in most commercial contexts, and an NDA should not be drafted to function as one.
- Does the California Uniform Trade Secrets Act replace an NDA?
- No. The Act provides statutory protection for genuine trade secrets, but an NDA adds contractual remedies and covers information that may not meet the trade-secret standard.
- Should the NDA specify a California venue?
- Yes. Specifying California courts avoids forum disputes and is consistent with the choice of California law.
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