A non-disclosure agreement (NDA) just like any other contract is legally binding. However, NDAs specifically establish a confidential relationship between parties. The party or parties signing the agreement agree that sensitive information they may obtain will not be made available to others. An NDA may also be referred to as a confidentiality agreement. NDAs may be unilateral or mutual.
A Unilateral NDA only requires one party to disclose its confidential information to the other party. They are the most common type of NDAs, Mutual NDAs on the other hand, require both parties to disclose their confidential information to each other. Both parties can limit how the other party will use and share their information. Mutual NDAs are commonly used in situations where parties are required to exchange a lot of private business information during negotiations.
In the creative industry, NDAs are commonly used to protect the confidentiality of sensitive projects before they go public. NDAs are typically used for media projects, big budget films, music videos, screenplays, and storylines when the following conditions are met:
- The concept is completely unique.
- The party or parties have obtained permission to proceed with the project.
- It will be used commercially in order to make a profit.
However, judging by a certain amount of distrust and information asymmetry in the industry, it is not uncommon to find that often Screenwriters, extras, and sometimes actors hold the view that NDAs are used by the producers to exploit them. There have been murmurings and complaints ranging from speculation about over or under payment as a result of confidentiality clauses in the NDA.
The major question becomes, what clauses should you look out for before signing an NDA? NDAs include a lot of information. It is therefore important that the signatory individual (the one being asked to sign the NDA) fully understands the terms and expectations of the contract such as:
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Time Duration of the Agreement
The NDA could also have a time limit. For example, the NDA may prohibit parties from discussing details of the project with third parties, time restrictions could be a year, two years, or even more. Famously Beyonce is said to have one of the tightest NDAs in the creative industry, and signees often cannot release any information at all indefinitely.
The definition of confidential information
For the avoidance of doubt, the definition is recommended to cover as much information as the disclosing party intends to disclose. Similarly, when reviewing the NDA, the receiving party must be vigilant and pay attention to the extent of information the party is permitted to disclose both orally and in writing. However, the definition of an NDA must not be ambiguous or lengthy.
The obligations of the receiving party
The main obligation of the receiving party in an NDA is to keep confidential information secret with all reasonable measures just as the other party to the agreement would keep its own secrets.
The terms of the agreement
This should be expressly stated, and no implied terms should be included in the NDA. This means all terms must be expressly stated and defined. For instance, the parties should know the duration of the agreement. Also, the years after which the receiving party may disclose the information after the relationship has been terminated should be expressly included.
This entails information the receipt party is not expected to keep secret because such information is already within the public domain or was disclosed to the receipt party by a third party who is not a party to the agreement.
Consequences of breach of an NDA
The consequences might include an injunction, which can prevent the erring party from committing further breaches, payment of liquidated damages, which can entitle the disclosing party to a specific amount of damages paid in the instance where there is a breach; and other legal actions, such as trade mark infringement or breach of fiduciary duty. It is necessary to be aware of the consequences of the breach and perhaps seek to renegotiate the agreement if the punishment is not proportionate to the breach.
It is critical for all creatives whether filmmakers, screenwriters, actors, and other players not to sign an NDA if they have unanswered questions or if there are parts of the agreement they disagree with. Before signing, you have the right to request changes to the confidentiality agreement. While some film producers may be opposed to an amendment if you have a valid reason for the change.
In conclusion, insofar as producers/filmmakers may believe that protecting their own privacy, projects or the ways in which their work is used is imperative for all creatives working in the entertainment industry. It is also important for the other stakeholders in the creative industry (Screenwriters, Actors, crews and others) to familiarise themselves with the key legal aspects of an NDA and seek the help of a competent entertainment legal professional that can prevent issues down the line rather than completely avoiding signing a Non-Disclosure Agreement totally. In the film and TV industry, once the terms are in writing, and you sign the contract, they can, and WILL apply!