NDA Clauses: What Must and Must Not Be Included

Many Saudi entrepreneurs signed an "NDA template" from the internet and discovered it did not protect them. The difference between a formal NDA and an effective one is specific clauses that must appear in every NDA you sign.

1. Defining "Confidential Information"

Loose definition: "all information you receive" = unenforceable in court.

Tight definition: "information clearly designated as confidential, whether orally or in writing, including without limitation: technical specifications, customer lists, pricing plans, access codes, source code."

Rule: define key categories, leave the definition open to expansion, require "marking" each piece of information as confidential at delivery.

2. Term

Confidentiality term: 3–5 years after the end of the commercial relationship (for ordinary secrets).

For core secrets (formulas, algorithms): perpetual secrecy "as long as the secret remains a secret."

Do not settle for "contract term." There must be explicit language continuing confidentiality after termination.

3. Specific Obligations

Bar disclosure to any third party without written consent.

Bar use of information for any purpose other than the agreed-upon relationship.

Return all copies of information (physical and electronic) at end of relationship.

Maintain information with a level of care no less than the party uses for its own information.

4. Exceptions

Not every piece of information should be covered. Common exceptions:

Information already known to the receiving party before the relationship.

Information that becomes public without fault of the receiving party.

Information received from a legitimate source.

Information required to be disclosed by court order.

5. Damages and Penalties

Liquidated damages: a pre-agreed amount paid automatically upon breach, instead of negotiating harm later. Typically SAR 50,000–500,000.

Right to request an urgent injunction upon breach without need to prove harm.

Party liability for breaches by its agents (partners, employees, consultants).

6. Jurisdiction

The Riyadh Commercial Court has jurisdiction, and Saudi law applies.

Or an arbitration clause at the Saudi Center for Commercial Arbitration.

Do not leave this to chance. An NDA with undefined jurisdiction may end up in the infringer's home-country courts.

7. Non-Solicitation

Non-solicitation clause: the receiving party may not hire or solicit the disclosing party's employees for 12–24 months after relationship end.

Important especially in consulting relationships where the receiving party meets the disclosing party's employees.

8. Amendments and Final Clauses

The agreement may only be amended in writing signed by both parties.

In case this agreement conflicts with any subsequent contract, this agreement prevails on confidentiality.

If any clause is invalidated, the rest of the agreement remains in effect (severability).

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