Is there a fee for the NDA

Non Disclosure Agreement: Freelancer and NDA

Hush-hush? Why, surely!

"Sure, why shouldn't I sign the confidentiality agreement?" This is how many freelancers react. However, it is important to pay some attention to the subject of NDA. Even if you don't intend to divulge customer information.

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Confidentiality agreement, non-disclosure agreement, non-disclosure agreement (NDA) - many names, one goal: to regulate in writing that confidential information is only used for the purpose for which it is intended.

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This short guide answers the most important questions that clients and freelancers are confronted with. What is actually covered by such an agreement? How far can she go? And what should you look out for before signing?

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Do not sign without looking!

It is worth taking a closer look: If signed carelessly, such agreements can, in the worst case, cost self-employed people their professional existence.

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Non-disclosure agreement - is it necessary?

When it comes to developing a new business idea, working with sensitive product and market data, or planning licensing, a confidentiality agreement is not uncommon. For the purpose of cooperation, the parties involved are ultimately entrusted with internal data and materials that are a valuable asset for companies. A written agreement regulates how external employees should handle this information. (For salaried employees, the law against unfair competition in Section 17 UWG prohibits the “disclosure of business and company secrets”.)

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Legal framework

Confidentiality agreements between the client and the contractor are of course legally binding. There is Freedom of contract. This means that both sides can freely design the content according to their ideas. Nevertheless, the contract is subject to control: it must not violate “morality” (§ 138 BGB) or the principle of “good faith” (§ 242 BGB).

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In addition, the obligations may not unreasonably disadvantage the contractor if they are unilaterally specified in the form of general terms and conditions (Section 307 (1) sentence 1 BGB). In the case of ABG clauses, these requirements are particularly strict.

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Spongy or very far-reaching NDAs are often ineffective

In practical terms, this means that the text of the contract should specify exactly what is covered by confidentiality. All-encompassing provisions that are vaguely worded, according to which all information must be kept confidential, are regularly rejected as ineffective in court.

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Contents of the contract: What does a confidentiality agreement regulate?

The agreement protects the interests of an entrepreneur. As a freelancer, with your signature you undertake to keep the information received secret and not to use it for any other purpose - for example in cooperation with another customer to register your own patents or to use the know-how economically yourself.

The scheme should be the Subject of the planned cooperation Clearly name: for example the business idea, concept, invention or product that the contractor is involved in developing. The agreement should also state which Information and materials are confidential. These can be meeting minutes, presentations, design proposals, advertising concepts, product details or business models that freelancers find out about during the project. Information such as business evaluations, price lists, customer data or production processes are usually classified as confidential because they would give competitors an advantage. Information must not necessarily marked as secret to be considered confidential.

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The wording in the contract text could be, for example:

“The contractor undertakes to treat information and materials that he receives in connection with the work on project XY confidentially and to use it exclusively for processing the order. The obligation of confidentiality applies regardless of whether the information in question is expressly designated as confidential or not.

The agreement includes written, oral and electronic information. The details are as follows:

_____________________________

_____________________________

_____________________________

[e.g. B. Concepts, business plans, source codes, design studies, technical know-how, etc.]. "

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What if nothing comes of it?

Another important question is what should happen to concepts or drafts if the collaboration does not materialize. Do they still fall under secrecy, or is the developing party allowed to use them?

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The agreement should also include the transfer of data or know-how to third parties who - whether internal or external - are not involved in the project. Should such a transfer not take place at all? Or basically yes, but only after prior written consent of the contract partner?

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A common formulation:

"The contractor may only make confidential information accessible to those persons who absolutely need it in order to process the order, and only if it has also committed it to secrecy."

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An example from everyday freelance work:

As a translator, you have to sign a confidentiality agreement in order to even receive the tender documents for a large project. When you look through it, you quickly notice that you cannot cope with the work on your own and you want to bring a colleague on board.

This must absolutely guarantee you confidentiality, before Give him the relevant information. Otherwise you have violated your own confidentiality agreement before the start of the project.

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An NDA can one or both contractual partners Commit to silence - depending on what it is about.

  • For example, if two companies consider a possible participation or cooperation, both sides will sign an agreement.

  • If, on the other hand, a software company has a new beta version tested by external parties, only the testers will have to commit to silence.

Agencies often contractually prohibit freelancers from communicating externally, working for the agency or its clients (and thus promoting themselves). In this case, you must maintain confidentiality about the commissioned services and work results.

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What's not part of the secrecy?

Information and findings that are known in specialist circles or generally can no longer be protected. Material that can be proven to have been received from (uninvolved) third parties is also not covered by the contract. The same applies to information that the contractual partners only received after the end of the cooperation.

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What about contractual penalties?

A confidentiality agreement is worthless without the threat of punishment.

The contractual penalty should be in a reasonable proportion to the fee or the damage that may result from the breach of secrecy. Contract penalties between 10,000 and 25,000 euros are often found in project contracts. Often there is no upper limit, so you have to pay for every single violation.

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"In the event of a breach of this confidentiality declaration, the contractor undertakes to pay a penalty of EUR 25,000 per breach."

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The contractual penalty serves as a deterrent, but not to redress possible damage. It must always be paid if it can be proven beyond doubt that a confidentiality obligation has been violated - regardless of whether this actually resulted in damage. The client can also assert claims for damages or omission.

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In many large companies, confidentiality agreements with high contractual penalties are a prerequisite for working with external service providers. However, freelancers run a high risk, especially since contractual penalties are not covered by professional liability insurance in the vast majority of cases (unless such violations are expressly included in the insurance).

If the amount is disproportionately high, the clause may not last in court. As a contractor, however, you will hardly want to rely on this - after all, such a punishment endangers your professional existence.

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From when and for how long does the regulation apply?

A nondisclosure agreement makes sense in front the transfer of important information closed. After that, the receiving party no longer has any interest in pledging itself to secrecy.

It is usually valid for at least the duration of the collaboration and often beyond, sometimes even for several years or for an indefinite period.

The agreement does not automatically expire even if there is no cooperation or if it is prematurely terminated by one side.

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Co-sign for project staff?

Project managers who sign a confidentiality agreement at the expense of their team of freelancers must ensure that they are adhered to by immediately informing those involved of their obligations. It makes sense to document this in writing.

For freelancers this means: You can be obliged to maintain silence, without having signed it myself!

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Nothing will happen ...?

Basically, you should never sign an NDA carelessly. The secrecy doesn't just hurt who deliberately Disclosing or stealing information, e.g. dragging the source code provided to a USB stick and offering it to the competition.

Also negligent violations are a breach of contract: It is enough for a designer to carelessly sketch out his design in a circle of friends or inadvertently leave documents on the desk in the shared office.

A lost smartphone without password protection, an e-mail to the wrong mailing list or an overly detailed description of the project as a reference on your own website are sufficient. The latter is problematic because work examples are an important acquisition tool for many freelancers.

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Ensure trustful cooperation

Free employment relationships need a good basis of trust. It is not a sign of mistrust when clients want to protect themselves through an individual agreement. After all, they give you direct insight into your idea, your product or your technology, behind which a lot of development work is involved. However, there is often a risk for those who have to commit to secrecy difficult to calculate. This is especially true for high contractual penalties that are due without intentional or conscious breach of confidentiality and without any actual damage.

A non-disclosure agreement is first and foremost a contract, its contents negotiable are. Freelancers should present their interests coherently in order to facilitate an agreement. This applies to the use of references as well as to unlimited confidentiality. Those who renegotiate should aim for a limit of two years after the end of the contract. Above all, however, it includes explaining to the customer that you cannot sign a contractual penalty in an amount that could endanger the existence of the customer. In the event that greater damage should arise, the company is at liberty to assert this as a claim for damages.

Anyone who has to accept high contractual penalties on a regular basis should think about expanding their professional liability insurance accordingly.

It often turns out that the contract template is a standard contract that no one has thought about further, and even difficult clauses can be deleted - especially if you signal to the customer that you are aware of the importance of confidentiality is aware. A confidentiality agreement that is limited to what is necessary prevents conflicts of interest and promotes uncomplicated cooperation.

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Links to free sample agreements