84

I am asked to sign an NDA before seeing the codebase for a potential project. This is all fine. But, one of the items on NDA reads like they can take me court on a possible violation, and charge me for all legal fees (in addition to any damage) no matter what the result/court decision is-- even if I'm honest.

I'm sure this isn't what they meant. But I'm not sure how I'd feel with this at the back of my mind. I signed NDA-s before, asked for changes in one or two.

There are some other vague items like this, but this is the one I'm concerned about. It's a tough NDA.

Would I look fussy if I'd raise this as an issue?

Do you usually sign NDA-s as is?

  • 54
    Have you considered talking to a lawyer to see if this is even legal to put into a contract? If it is as you have written, you should ask for that change. What happens if they decline and you decline to sign that nda? Are you a single contractor, or part of company? If later, have you asked your company lawyer? – Benjamin Dec 18 '19 at 21:59
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    @Benjamin i'm a single contractor on self-proprietorship. I think i'll ask a lawyer tomorrow – xavierz Dec 18 '19 at 22:53
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    “I'm sure this isn't what they meant.” I'm not. People try putting all sorts of nonsense into contracts. – Paul D. Waite Dec 19 '19 at 10:33
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    @smartname1 to most people, when you get a contract or NDA to sign, all you see is the text you've been given. But an expert will see whether there are clauses missing that should normally be there, or whether there are unusual clauses there, or that some clauses actually refer to regulations elsewhere that you're not aware of. – ObscureOwl Dec 19 '19 at 11:12
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    @smartname1 before you start asking for changes you need to 1) know what the current text really means, 2) what changes you want, 3) what changes you'd be willing to settle for 4) what you would not be willing to accept. And you need some expert advice to find out those four things. – ObscureOwl Dec 19 '19 at 11:28
217

You tell them: "The terms of your NDA look to me as if you could sue me for NDA violation, and I would have to cover all the legal fees, even if it was shown that I haven't done anything wrong. As it is, I couldn't possibly sign this NDA. I would suggest that you change it to something that is acceptable".

You don't sign anything that looks dodgy to you. Even if they make all kinds of promises that what you fear isn't going to happen, that doesn't mean anything to you.

Bad terms in contracts usually appear if some amateur lawyer tries to make sure that everything is bent to the advantage of the company. A professional lawyer will only add terms that a reasonable person would be willing to sign - because they know that otherwise no reasonable person will sign.

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    You don't want to look fussy, but you also don't want to pay for a lawsuit that the company starts against you if you fall out for any reason. You are a software developer. You are intelligent. If it looks bad to you, then either it's bad or it's badly written, either way, they need to change it. – gnasher729 Dec 18 '19 at 23:28
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    @xavierz legalese is just a very strange programming language. If your code-spideysenses go all tingly reading it they it is probable someone forgot their version of a semicolon somewhere. Trust your intuition. – Borgh Dec 19 '19 at 8:50
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    Just be mentally prepared for them to lie and say "no, you misunderstood, it doesn't allow us to do that, you can sign it, no worries" to trick you to sign it and then screw you up later. If you don't want to sign it, don't give an opportunity for them to persuade (or guilt-trip) you to do it. – Val Dec 19 '19 at 10:12
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    @Val +1 and importantly, remember that the manager promising you it won't happen almost definitely isn't a lawyer and isn't in control of the company's legal process. They can be saying it won't happen, with full honestly and integrity, and it still means nothing - it's not their decision whether you'll get sued or not. – Bilkokuya Dec 19 '19 at 10:18
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    If they say it "won't" happen, then they should be happy to completely remove that clause (or reword it as a compromise). – freedomn-m Dec 19 '19 at 10:23
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I'm sure this isn't what they meant.

No, I assure you. That's what they meant.

Just strike out that clause, or modify it, initial it and date it (but do not sign it yet). Then return it to them, highlighting the change you've made, so they can countersign the change or issue you a new NDA.

And be sure the NDA also has a reasonable expiration date on it. If there is a problem with the timeframe, correct it yourself the same way you did with the other clause.

And do not ask for permission before you change the NDA, just change it, and send it to them. This way, they're the ones holding up the process if they hesitate signing it. In other words, if they don't sign it, they become the "fussy" ones.

And be willing to walk away if they're unreasonable. It's not worth working for an unreasonable employer. If they try something like this with the NDA, they'll try something else with the job contract.

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    Do you have any guidelines for what qualifies as a reasonable expiration date? – Anketam Dec 19 '19 at 19:02
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    I like this answer because it places the fussyness on the ones with the fussy NDA. – Nathan Goings Dec 19 '19 at 20:50
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    Definitely be ready to walk away. Some places won't even discuss modifications. I've walked away in the past for that very reason. I'm glad I did too... – Brian Knoblauch Dec 19 '19 at 21:25
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    @Anketam, I tried googling for one, but I couldn't find one. But ask yourself. Is that codebase going to be sent to your computer? Or will you only see it on their computer while under their supervision? Are you the one who made the request to look at it? Is the code base groundbreaking? Or is it something pretty normal and run-of-the-mill? Assuming the worst, not groundbreaking, you didn't request it, you won't get a copy, I'd say 1 or 2 years (but keep in mind that some developers would refuse to sign a one-sided NDA for any period of time, it also depends on how overbearing the NDA is). – Stephan Branczyk Dec 19 '19 at 21:35
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    A good general rule of thumb is written agreements always supersede verbal agreements, since the latter can simply be denied. – Machavity Dec 20 '19 at 15:25
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I'd say it doesn't matter if it is fussy or not, if that NDA is as you think it is. More importantly, show to a lawyer and ignore anything that any of us say.

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    I think i'll do that. it's night time here, no lawyers till tomorrow – xavierz Dec 18 '19 at 22:36
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    Specifically, show it to your lawyer, don't ask their lawyer what it means. – ObscureOwl Dec 19 '19 at 11:15
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    "show it to a lawyer" can cost a few hundred dollars. – Robin Bennett Dec 19 '19 at 13:24
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    @RobinBennett - Not showing it to a lawyer can cost exponentially more. – RyanfaeScotland Dec 19 '19 at 16:08
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    This is the correct answer. It's regular for companies, vendors, etc. to throw abusive terms in contracts and then back down if you consult a lawyer. – dbeer Dec 19 '19 at 16:13
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One other thing I'd suggest (as a fellow independent contractor):

Get yourself a Professional Liability and General Liability insurance policy, or their equivalents in your country. They can help protect you in the event that a client attempts to sue you.

  • 1
    This, absolutely. Having been sued once, for supposed breach, I can attest this saved my bacon. – bishop Dec 20 '19 at 4:40
6

Remember, the author of the contract is (usually) not the same as the party you are dealing with (manager, etc). The party you are dealing with wants to make a deal. The lawyer who drew up the contract only cares about protecting the company - not making a profit or allowing the company to hire people.

In the case of your contract, I would simply cross out the "punishments" you think are excessive and add a expiration date.

Once I was given a contract that said I would be responsible for "estimated loss of profits". I wrote back:

"Nice try but yeah, no. ;-) [1] If I can strike out the unreasonable parts we can probably come to some agreement." (Turned out to be great client in the end.)

This was a much more involved contract than an NDA and turned it over my lawyer but you get the idea.

Here's an aside: When you are trying to make a deal to collaborate/partner with someone, an overreaching contract triggers an adversarial response.

[1] ((d) Recover any and all actual, incidental and consequential damages to ZZZ, including but not limited to actual or estimated loss of profits and sales and costs to cover, attorney’s fees and costs)

2

I have negotiated NDAs from the development side where I was a PM, a programmer, and an engineer. I've done these with large computer chip manufacturers, and in every case legal on both sides of the line were involved. There was much back-and-forth for every aspect- We'd point out restrictions we were uncomfortable with, they'd point out where they felt their IP was threatened. It took 6 months, but in the end we had something we could both agree to. But regardless of the specific outcomes (including 'walking away' from one until they came back with a counter), there were statements about legal fees. However they were never 1 sided and were never absolute.

So what you have described is a significant red flag to me.

2

This could be amateur legal work (it has some of the hallmarks of it). Sometimes smaller employers will roll their own legal documents to save money (lawyers aren't cheap). While the documents don't hold up in court, it does mean you'll have quite the legal mess in sorting that out. Since they shifted all costs to you, just getting to the point may cost you an arm at a leg, just to have a judge throw the entire thing out as being legally invalid. Even if the judge doesn't hold you liable for their costs, you will still be liable for your own.

I would consult an attorney on if this is something legally binding in the first place. Some jurisdictions have laws limiting what an employer can legally obligate you to. If the NDA isn't written properly for legal enforcement, I wouldn't sign anything unless they can produce a proper legal agreement (in which case you insist on the legal fees portion being removed)

0

This sounds like they're covering everything but you. They want to be completely free of any sort of legal fees. It's unclear how enforceable this would be though. I'd imagine corporate lawyers would charge in the 100s of 1000s to do a NDA case. I don't know how much you make but even in the upper end of what a software developer could make, I don't think anyone could reasonably pay that back for at least a couple of decades. You'd lose pretty much everything including any chance of owning a home or vehicle if you include student loans. I think that is completely unreasonable and unfair. I don't think you should sign such a document regardless of enforceability of it.

-6

Draft your own one-pager NDA and hand it in as counter-proposal explaining that the NDA presented to you has terms which are too risky for you to sign.

Benefits:

  1. You don't have to read through NDA's anymore
  2. Your risk is mitigated as you aren't collecting all kinds of different NDA's
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    -1 because you forgot to include: "Downsides: 1. You will be refused every job you apply to on this basis". See this answer for a more reasonable approach to modifying the NDA without throwing the entire thing in the bin. – Jon Bentley Dec 19 '19 at 15:49
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    This is what my company did when we requested a 1-way NDA for some proprietary chip information. Wrote their own NDA, completely ignoring the supplied NDA from the manufacturer. It was very frustrating for the delays that that entailed... – J.Hirsch Dec 19 '19 at 21:37
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    I wasn't addressing applying for a Job but for smaller freelance projects as this is my understanding from the question. In such cases, people are just interested in protecting their code and business secrets which can be covered by a reasonable one-pager. Hence, point out the issues with the existing NDA and propose to make things easier for both sides with the one-pager. Did it myself and it works, you just have to be friendly and reasonable about it. Or am I seeing something completely wrong here? – Roderick Jonsson Dec 20 '19 at 17:29

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