Make a Texas Non-Disclosure Agreement

Texas State Laws

The Texas Trade Secrets Act, Tex. Bus. & Com. Code §§ 134A.001 through 134A.008 , regulates the use of non-disclosure agreements. A business must understand the roles and obligations for each party of the agreement as well as the limitations of the document.

The Texas Trade Secrets Act is very informative. It sets limitations. For example, a Texas non-disclosure agreement cannot have an unlimited time frame. If it does, the document can be terminated by either party at any time.

Companies face an increasing amount of competition. Providing the best possible protection for business secrets is important. Businesses should use the form along with a Texas non-compete agreement .

Definition of “Trade Secrets”

Of course, the purpose of a Texas non-disclosure agreement is to protect trade secrets. Under the Texas Trade Secrets Act, a “trade secret” is defined as any form or type of information. This includes business, scientific, technical, economic, or engineering information. It also includes any sort of formula, design, prototype, pattern, plan, compilation, program, device, code, method, technique, process, procedure, financial data, or a list of actual or potential customers or suppliers.

A trade secret may be held in tangible or intangible form. It does not matter how the information is stored, compiled, or otherwise memorialized. The information must have some sort of actual or potential monetary value.

Its value comes because the information isn’t generally known by others, regardless of whether “others” means the public or other businesses. It isn’t information that another company may determine by its own development techniques. It is something that truly is unique to the business.

The company wishing to protect the information must take reasonable measures to keep the information secret.

How to Write a Texas Non-disclosure Agreement

To write a basic Texas non-disclosure agreement, you should first read the Texas Trade Secrets Act. This will help you understand how Texas law can help protect certain types of information that gives your business a competitive edge. However, reviewing the law is not a substitute for obtaining competent legal advice. A lawyer can help ensure that your NDA is enforceable and can protect your trade secrets. You can save your template in Microsoft Word (.docx) for easy editing.

• The first paragraph identifies the parties and their roles. The Disclosing Party is the business with the trade secrets. The Receiving Party is the third-party who will receive access to the information. Then, the purpose (or scope) of the agreement is explained: to prevent the misappropriation of trade secrets. An effective date, geographical restrictions, and clear time period restrictions are also listed. Remember that a perpetual time period may not be used as it will essentially render your NDA as a contract that may be terminated by either party at will.
• A definition of "trade secret" according to the Texas Trade Secrets Act. The State of Texas has a very broad definition of trade secrets. It is any type or form of information that is tangible or intangible. It can be related to business, scientific, technical, economic, or engineering. Examples include a formula, design, prototype, pattern, plan, compilation, program, device, code, method, technique, process, procedure, financial data, or a list of actual or potential customers or suppliers with actual or potential value. The value exists because the information isn't available to the public and isn't available for use by other businesses. Your business must take reasonable means to protect the information.
• Exemptions to confidential status. Information may not be considered confidential if it is made public through no fault of the receiving party, the disclosing party provides written consent to release certain information, the receiving party learns certain information through legitimate means without assistance from the disclosing party or their agent, or the receiving party discovers or creates something before providing it to the disclosing party.
• Obligations of the receiving party. Examples include maintaining the information's confidential status to the best of the receiving party's ability, restricting access to the information, and not using the information for their benefit unless they first receive written consent from the disclosing party.
• Relationship clause. Some Texas non-disclosure agreements benefit from the use of a relationship clause as it states that nothing within the agreement deems either party an employee, joint venturer, or partner of the other for any purpose.
• Jurisdiction clause. A jurisdiction clause sets Texas law as the governing law.
• Severability clause. A severability clause is used to keep the remainder of the agreement enforceable if a Texas court holds that a single clause in the agreement is invalid.
• Integration clause. An integration clause is used to express the complete understanding of the parties regarding the subject matter and supersedes all previous proposals, agreements, representations, and understandings. It also states that the NDA may only be amended in writing and only if the parties sign the amendment.
• Waiver clause. The waiver clause states that if a party fails to exercise any rights as presented in the NDA does not waive prior or subsequent rights.

The Disclosing Party and the Receiving Party should sign and print their names. The signatures should be dated. Each party should receive a copy of the executed contract for their records.