The Four Exclusions Every Fair NDA Should Have

The four

• Information that is or becomes publicly available other than through your breach.
• Information you already knew before it was disclosed to you, which is why keeping your own records matters.
• Information you develop independently without reference to what was disclosed.
• Information lawfully received from a third party who was free to disclose it.

Why each one exists

The public information exclusion prevents a counterparty asserting rights over material anyone can read. Without it, a party can claim you learned from them something described in an industry publication, and you would be arguing about provenance rather than pointing at a clause.

Prior knowledge and independent development protect what you already had and what you build yourself. Third party receipt covers information that reaches you legitimately by another route. Together they keep the obligation attached to what was actually disclosed rather than to a subject area.

The fifth exclusion

Disclosure required by law, regulation or court order should be permitted, ordinarily with a requirement to notify the other party where lawful so they can seek protection. Without it, an agreement puts you in the position of choosing between breaching the contract and disobeying an order.

This clause is standard and its absence is a straightforward drafting gap rather than a negotiating position. Asking for it is not contentious.

Independent development deserves attention

If you build products, this is the exclusion to look at most carefully. A team working on a similar problem will arrive at similar answers, and the exclusion is what separates that from a breach.

Some agreements narrow it to development by people who had no access to the confidential information, which is stricter and can be difficult to demonstrate in a small company where everyone talks to everyone. Where you can, keep it framed around not using the disclosed information rather than around segregating personnel.

Two details that get missed

First, exclusions should survive termination. An agreement whose exclusions lapse when the term ends leaves you with a continuing obligation and no carve-outs, which is worse than either.

Second, keep your own records. Prior knowledge and independent development are only useful if you can show what you had and when. A dated record of your own work is what turns an exclusion from a clause into a defence.