Use Clauses and Related Provisions in NDAs: Avoiding Unintended Standstills and Restrictions on Transactions

This CLE course will guide business counsel in reviewing nondisclosure agreements (NDAs) to avoid unintended consequences such as excessive restrictions on the ability to engage in transactions related to the target company or its industry. The speaker will examine potential traps and possible solutions related to use clauses and other common NDA provisions.

NDAs are key components to transactions that allow for the flow of commercial information from the disclosing to the receiving party for due diligence purposes while protecting the disclosing party's proprietary and confidential information.

Nearly all NDAs contain a use clause that defines and limits how the receiving party may use the information disclosed. If not carefully drafted, however, a use clause and various related provisions may have the same effect as a standstill or non-circumvent clause and could block the receiving party from pursuing desired transactions.

Business counsel must be aware of the potential pitfalls that may arise in negotiating NDAs and best practices for drafting use clauses and other provisions to avoid unintended consequences.

Listen as Cary M. Reiss, Partner at Barnes & Thornburg, shares examples from his extensive experience drafting and negotiating NDAs and discusses potential pitfalls and best practices for drafting use provisions and other clauses.