Negotiation Overview
Amendment clauses are typically low-stakes compared to substantive provisions, but they establish the framework for any future changes to your agreement. The key tension is between protection (preventing unauthorized modifications) and flexibility (allowing quick adjustments when needed).
The main negotiation points are: (1) what form amendments must take, (2) who is authorized to sign, (3) whether electronic signatures are acceptable, and (4) how informal modifications are handled.
Protection vs. Flexibility Tradeoffs
| Element | Maximum Protection | Maximum Flexibility |
|---|---|---|
| Form Requirement | Formal written amendment with specific reference | Any written agreement, including email |
| Signature Authority | Officers or specifically designated signatories only | Any employee with apparent authority |
| Electronic Signatures | Certified e-signature platforms only | Email confirmation accepted |
| Course of Dealing | Explicitly excluded from modifying terms | May be considered in interpretation |
| Administrative Changes | All changes require formal amendment | Non-material changes may be informal |
General Guidance
For NDAs protecting truly sensitive information, err on the side of protection. For standard commercial NDAs where flexibility is valued, a balanced approach typically works best.
Strategies for Maximum Protection
Use these strategies when you need strong controls over modifications.
Strategy 1: Require Specific Reference
Insist that amendments must expressly reference the original agreement and identify the specific sections being modified. This prevents vague documents from accidentally amending your NDA.
Strategy 2: Specify Authorized Signatories
Require that amendments be signed by officers, directors, or individuals specifically designated in writing. This prevents mid-level employees from inadvertently agreeing to changes they don't have authority to make.
Strategy 3: Exclude Informal Modifications
Add explicit language stating that course of dealing, course of performance, trade usage, and oral discussions cannot modify the agreement. This creates a clear bright line.
Strategy 4: Require Mutual Execution
Ensure amendments require signatures from both parties, not just acceptance by one party. This prevents unilateral modifications.
"We need to ensure that any modifications to this NDA are carefully considered by appropriate decision-makers on both sides. Let's require that amendments be signed by officers or designated signatories, and that they specifically reference this agreement and the sections being changed."
Strategies for Greater Flexibility
Use these strategies when operational flexibility is important.
Strategy 1: Broaden Authorization
Accept "authorized representatives" as signatories rather than requiring officers. This allows business teams to make changes without escalating to executives for every modification.
Strategy 2: Accept Electronic Communications
Allow email confirmations from authorized representatives to constitute valid amendments, at least for non-material changes. This speeds up routine modifications.
Strategy 3: Carve Out Administrative Changes
Create an exception for "administrative or operational modifications that do not materially alter rights or obligations." This allows address changes, contact updates, and similar housekeeping without formal amendments.
Strategy 4: Include Amendment Proposal Process
Add language allowing either party to propose amendments and requiring a response within a set timeframe. This creates a framework for efficient modification discussions.
"We'd like to streamline the amendment process for routine changes. Can we agree that email confirmation between authorized representatives is sufficient for non-material modifications, while reserving formal written amendments for substantive changes?"
Common Negotiation Issues
Issue 1: Electronic Signature Uncertainty
In a world of DocuSign and Adobe Sign, clarify whether these satisfy signature requirements. Most jurisdictions recognize electronic signatures, but explicit acknowledgment in the contract prevents disputes.
Issue 2: Counterparts and Transmission
If you require original signatures, you may create logistical headaches. Consider allowing counterparts and transmission by email or fax to ease execution while maintaining signature requirements.
Issue 3: Authority Disputes
Vague authorization language can lead to disputes about whether the signing person had authority. Either specify titles/positions or require corporate resolutions for significant amendments.
Issue 4: Relationship to Other Agreements
If the NDA relates to a master agreement, consider whether amendments to the master agreement should automatically amend the NDA, or whether separate amendments are required.
Compromise Positions
When negotiations stall, consider these middle-ground approaches:
Tiered Modification Process
Material amendments require officer signatures and formal written documents. Non-material amendments may be made by email confirmation between designated business contacts. Define what constitutes "material" to avoid future disputes.
Pre-Approved Representatives
Include a schedule of authorized representatives who can sign amendments, rather than limiting to officers or opening to all employees. Update the schedule as needed through a simple notice process.
Electronic Signature with Platform Limits
Accept electronic signatures only through specified platforms (DocuSign, Adobe Sign) that provide audit trails, rather than simple email acceptance. This balances convenience with documentation.
Key Takeaways
1. Always require written amendments. Oral modifications create uncertainty and are difficult to prove in disputes.
2. Define authorization clearly. Specify who can bind each party to amendments to prevent unauthorized changes.
3. Address electronic signatures. In today's remote work environment, clarity on e-signature acceptance prevents execution delays.
4. Match formality to risk. High-value NDAs warrant stricter amendment procedures; routine commercial NDAs can afford more flexibility.
5. Exclude informal modifications. Explicitly state that course of dealing and verbal discussions cannot modify the agreement.