Establishes how mutual confidentiality obligations work when both parties share sensitive information, including proper party identification and ensuring balanced protections.
Low Complexity
What This Clause Does
A mutual NDA structure clause establishes that both parties will be sharing confidential information with each other and that each party will have both disclosure rights and protection obligations. Unlike a one-way NDA where only one party discloses and the other receives, a mutual NDA creates reciprocal obligations. The structure clause typically defines how to identify which party is the "Disclosing Party" and which is the "Receiving Party" for any given piece of information, and ensures that all protective provisions apply equally to both parties.
Why This Clause Matters
Enables Balanced Relationships: Most business discussions involve both parties sharing sensitive information. A mutual structure reflects this reality and ensures neither party is unfairly burdened.
Simplifies Negotiations: Instead of negotiating two separate one-way NDAs, a single mutual agreement covers both directions of information flow.
Ensures Equal Treatment: Mutual language helps ensure that protective provisions (like remedies and indemnification) apply equally to both parties, preventing hidden asymmetries.
Reduces Confusion: Clear role definitions prevent confusion about which party has which obligations with respect to any specific piece of information.
Facilitates Future Collaboration: A mutual structure accommodates evolving relationships where the balance of information sharing may shift over time.
Legal Context
Mutual NDAs are fully enforceable and are the most common structure for business-to-business confidentiality agreements. Courts interpret mutual provisions to apply symmetrically unless the language clearly indicates otherwise. The key legal consideration is ensuring that the parties are properly identified and that it is clear when each party is acting as the Disclosing Party versus the Receiving Party. Ambiguity in role identification can lead to disputes about which obligations apply to which information. For this reason, mutual NDAs should clearly define how information is designated as confidential and should use generic terms (Disclosing Party, Receiving Party) that apply based on context rather than party names.
Mutual Confidentiality
This Agreement is a mutual confidentiality agreement. Both parties may disclose Confidential Information to the other party. As used in this Agreement, the party disclosing Confidential Information is referred to as the "Disclosing Party" and the party receiving Confidential Information is referred to as the "Receiving Party." Each party may be a Disclosing Party or Receiving Party depending on the information being exchanged.
Basic Version: Simple mutual structure language that establishes reciprocal obligations. Suitable for straightforward relationships where both parties will share similar types of information.
Mutual Confidentiality Agreement
1. Mutual Obligations. This Agreement establishes mutual confidentiality obligations. Each party may disclose Confidential Information to the other party, and each party shall protect the Confidential Information it receives in accordance with the terms of this Agreement.
2. Party Definitions.
(a) "Disclosing Party" means, with respect to any item of Confidential Information, the party that discloses or provides such Confidential Information (whether directly or through its Representatives).
(b) "Receiving Party" means, with respect to any item of Confidential Information, the party that receives such Confidential Information.
(c) Each party shall be considered the Disclosing Party with respect to its own Confidential Information and the Receiving Party with respect to the other party's Confidential Information.
3. Equal Application. All obligations, restrictions, rights, and remedies set forth in this Agreement shall apply equally to both parties. Any provision expressed in terms of "Disclosing Party" and "Receiving Party" shall be interpreted to apply reciprocally based on which party disclosed the relevant information.
4. Identification of Information. To ensure clarity regarding the source of Confidential Information:
(a) Written or electronic materials shall be marked with the name of the Disclosing Party or shall clearly indicate their source.
(b) Oral disclosures shall be identified as confidential at the time of disclosure and summarized in writing within fifteen (15) days.
5. Commingled Information. If Confidential Information from both parties becomes commingled in a manner that makes the source difficult to determine, each party shall treat such commingled information as Confidential Information of both parties and afford it the highest level of protection required for either party's information.
Standard Version: Comprehensive mutual structure with clear definitions, equal application provisions, and practical guidance for identifying information sources.
Mutual Confidentiality with Primary Disclosing Party
1. Primary and Secondary Roles. While this Agreement contemplates mutual disclosure of Confidential Information, the parties acknowledge that [Company A] ("Primary Disclosing Party") is expected to disclose significantly more Confidential Information than [Company B] ("Primary Receiving Party").
2. Asymmetric Protections. In recognition of the parties' different roles:
(a) The Primary Disclosing Party's Confidential Information shall be subject to a confidentiality period of five (5) years from the date of disclosure.
(b) The Primary Receiving Party's Confidential Information shall be subject to a confidentiality period of two (2) years from the date of disclosure.
(c) The Primary Disclosing Party shall be entitled to injunctive relief for any breach without posting bond.
(d) The Primary Receiving Party shall indemnify the Primary Disclosing Party for any breach by the Primary Receiving Party or its Representatives.
3. Burden of Proof. In any dispute regarding the source or ownership of Confidential Information:
(a) Information in the Primary Disclosing Party's core business areas shall be presumed to be the Primary Disclosing Party's Confidential Information.
(b) The Primary Receiving Party bears the burden of proving that any disputed information originated from the Primary Receiving Party.
4. Audit Rights. The Primary Disclosing Party shall have the right to audit the Primary Receiving Party's compliance with this Agreement upon reasonable notice. The Primary Receiving Party shall not have reciprocal audit rights.
5. Return of Materials. Upon termination or the Primary Disclosing Party's request, the Primary Receiving Party shall immediately return or destroy all Confidential Information. The Primary Disclosing Party shall return or destroy the Primary Receiving Party's Confidential Information within thirty (30) days of termination or request.
Warning - Asymmetric Mutual: While styled as a "mutual" NDA, this version creates significant asymmetries favoring the Primary Disclosing Party. Different confidentiality periods, one-sided indemnification, presumptions favoring one party, and unequal audit rights undermine true mutuality. Receiving Parties should push for genuinely equal terms or acknowledge this is effectively a one-way NDA.
1
Verify True Mutuality: Read the entire agreement to ensure that all provisions actually apply equally to both parties. Some "mutual" NDAs contain asymmetric terms buried in remedies, indemnification, or termination clauses.
2
Use Generic Role Terms: Insist on using "Disclosing Party" and "Receiving Party" rather than named parties throughout the agreement. This ensures provisions automatically apply correctly regardless of who disclosed what information.
3
Establish Information Identification Procedures: Agree on clear procedures for marking or identifying confidential information. This prevents disputes about whether specific information was disclosed under the NDA and by whom.
4
Address Oral Disclosures: Ensure the agreement provides a practical mechanism for oral disclosures to be recognized as confidential. Written follow-up requirements should have reasonable timeframes.
5
Check Confidentiality Periods: Confirm that confidentiality periods and survival provisions apply equally. Watch for clauses that extend one party's protection while limiting the other's.
6
Consider Conversion Rights: If the relationship may evolve to one where only one party discloses, consider including language allowing conversion to a one-way NDA if mutuality becomes unnecessary.
Named Party Provisions
When provisions use specific party names (e.g., "Company A shall...") instead of role-based terms (e.g., "Disclosing Party shall..."), check whether the obligation truly applies to both parties or creates hidden asymmetry.
Different Confidentiality Periods
Watch for provisions that create different confidentiality periods for each party's information. This undermines the mutual nature of the agreement and may leave one party's information less protected.
One-Sided Remedies
Remedies provisions (injunctive relief, indemnification, liquidated damages) should apply equally. If only one party can seek injunctions or if indemnification flows only one direction, the agreement is not truly mutual.
Burden of Proof Presumptions
Language presuming that disputed information belongs to one party places an unfair burden on the other party to prove ownership. In a truly mutual agreement, neither party should benefit from presumptions.
Unequal Return of Materials Obligations
If one party must return materials immediately upon request while the other has extended timeframes, the agreement favors the party with more flexibility. Ensure return obligations are symmetric.