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What is the risk in executing a unilateral NDA?

We are a small software company that has recently starting getting traction in the enterprise market. Our price point is modest relative to other applications. A prospective customer just asked us for the first time to sign a unilateral NDA. We do not have in house counsel.

There can be many risks associated with any non disclosure agreement (NDA); however, it seems that your question is specific to the risks associated with the unilateral aspect of the NDA.

Typically, the argument for a unilateral NDA is that only one party needs to disclose confidential information so the other party should agree to protect that information. In practice, most situations that call for an NDA involve an interaction or exchange of some sort and often that interaction may involve unstructured sharing of information, such as phone calls and meetings, that make it difficult to ensure that confidential information is disclosed by only one of the parties. As a result, the primary risk of the unilateral NDA is that it leaves one party exposed if the interaction or information exchange does not proceed exactly as initially envisioned. In addition, the party that is receiving the benefits of the unilateral NDA but not agreeing to its obligations has no incentive to ensure that the obligations are reasonable.

For these reasons, it is common to negotiate a mutual NDA even when the information exchange is anticipated to be one-sided.