Looking for a Standard NDA Template? Comparing Claustack vs. Bonterms NDAs

Contract standardisation is particularly valuable when there is a recurring need for a particular type of contract, and only a few factors typically vary from case to case. Non-disclosure agreements (NDAs) have long been viewed as a candidate for this, but achieving widespread adoption has proved more difficult.

Two recently-published NDA standards have seen widespread interest: Claustack’s oneNDA and Bonterms’ Mutual NDA.

Both are, in my view, excellent. In this article, I outline their similarities and then dive deeper into their differences.

Largely similar

The most important point is that they’re very similar indeed.

• Both can be used free of charge.

• The similarities in substantive terms are much more significant than the differences. For instance, the restrictions on use and disclosure, the exceptions and the provisions for deletion or retention are almost identical. They are also in line with my understanding of ‘what’s market’ in these areas. Boilerplate (e.g. entire agreement, waiver, equitable relief) is also very similar.

• Their format is also similar. Both require you to fill in a few basic terms – called ‘variables’ in oneNDA and ‘deal details’ by Bonterms. In addition to the parties’ details, these principally include:
  • purpose
  • duration of confidentiality
  • governing law
  • dispute resolution

The rest of this article focuses on the differences between the two standards.

High-Level Differences

I’ll start with three differences which may be more important to many people than the relatively slight substantive differences considered under the next heading.

• Style. Bonterms NDA is written in modern American style, oneNDA in modern UK / European style. I find the latter more readable, but no doubt it depends partly on what you’re used to.

• Length. oneNDA is 74% of the length of Bonterms. 777 and 1048 words respectively, ignoring the cover pages in both cases.

It’s for you to weigh the value of what Bonterms does with its extra word count (see the next heading) against oneNDA’s succinctness.

• Modifications. oneNDA encourages you to limit your amendments to the ‘variables’ mentioned above, and asks you to remove the branding if you decide to go off-piste. To quote from the FAQ:

Why can’t I change or add my own text to oneNDA?

Because the outcome of everyone being able to add their own language to it is that everyone will end up with their own ‘flavour’ of oneNDA resulting in a world where we all have to go back to reviewing, redlining and negotiating. Not ideal and certainly not in the spirit of the initiative.

However, if you end up negotiating it and changing the language, please make sure you remove any reference to oneNDA and all branding.

By way of contrast, Bonterms has an additional box on its cover page, for you to make any amendment that you want to. It’s really up to you whether you prefer the discipline of oneNDA or the freedom of Bonterms.

Differences of Detail

I spotted eight differences of detail worth mentioning.

• Points (1) to (3) are substantive, but their importance and appropriateness will depend on your context.

• Points (4) to (8) aren’t likely to be significant, in my view, but I’ve laid them out anyway so you can judge.

There are some additional minor differences of wording and boilerplate which I haven’t mentioned, but nothing which I think is likely to matter to most people most of the time.

(1) Disclaimers: Bonterms has more

Bonterms has some disclaimer and reservation of rights language (sections 8 and 9) which isn’t in oneNDA. No doubt this reflects the US law background of the Bonterms NDA. A risk for you to assess under your chosen governing law.

(2)  Reverse Engineering: Bonterms prohibits

Both recognise that the recipient won’t be liable if they develop the same information independently. However, the Bonterms NDA goes on to prohibit reverse engineering (section 3(d)). That may be irrelevant to you. If relevant, your preference may vary according to whether you are mainly receiving or disclosing technical information.

(3) Export Controls: Bonterms addresses

Bonterms NDA goes beyond the core scope of an NDA by also prohibits export or production in breach of export controls (section 3(e)). I can understand why that’s there, given the fierceness of US regulation on that topic. Whether it’s a practical issue for you will no doubt depend on your context.

(4)  Duration: oneNDA is simpler

Both standards allow you to specify theconfidentiality period. Bonterms offers ‘perpetual’ as a prefilled option, but that could be written into the oneNDA cover page variable as well.

Bonterms allows you to specify a set term for the NDA, in addition to the confidentiality period, whereas oneNDA doesn’t. I prefer oneNDA on this, as I feel having two periods is an unnecessary subtlety, but it’s not a huge deal.

(5)  Notices: Bonterms allows for post

Both standards allow for notices by email. Bonterms also provides (section 12) for a postal notice option. I can personally live without that, but no harm having it in the form.

(6)  Duty to protect: oneNDA is stricter

Both standards impose duties to use confidential info (CI) only for an agreed purpose, and not to disclose it. Clauses 3(a) and (b) of oneNDA. Sections 3(a) and (b) of Bonterms.

oneNDA imposes a duty to keep it secure but Bonterms NDA only requires reasonable efforts to protect. Clause 3(b) and section 3(c) respectively. Different concepts, clearly, and you may have a preference. But I would suggest reflecting on how big you think the difference is likely to be in real world information security terms.

(7)  Definition of CI: Subtle differences only

The definitions of CI start from slightly different places.

In Bonterms, something isn’t CI unless reasonably understood as confidential or marked as such (section 2). oneNDA doesn’t have those prior requirements (clause 2(a).

I slightly prefer Bonterms’ approach to this, but I doubt it will matter much in reality because:

• Material which does not fit the Bonterms definition seems unlikely to be a source of a serious claim under oneNDA.

• Both have exceptions (one NDA clause 1(d) and Bonterms section 4) and rights to disclose (clause 2 and section 5) which are almost the same, except for the reverse engineering point already mentioned.

I expect that these things will usually be more important than the subtly different definitional starting points.

(8)  Dispute resolution: Same in substance, but different prompts

Both standards allow you to choose governing law and an exclusive place for litigation.

• oneNDA expressly offers arbitration as an alternative to litigation. But you could write that into Bonterms’ ‘additional changes’ box.
• Bonterms prompts you to choose venue as well as jurisdiction, a distinction of significance in US law. But you could write that into the oneNDA disputes variable box if agreeing upon litigation in the United States.

Conclusion

I think both standards are excellent and these differences are really only at the edges. Both can work very well. But I hope the list of differences is useful.

Postscript

This article is a slightly rewritten version of something I posted on LinkedIn. I was pleased to see that the leading people behind oneNDA (Electra Japonas) and the Bonterms NDA (Todd Smithline) commented positively on it in that form.

Needless to say, the opinions expressed are mine alone and there may be some subtleties of significance in your particular context or legal system. I used to work as a lawyer in England and Asia, but I haven’t done so for some years and my observations here are pragmatic ones from a business rather than legal perspective.

Also, bear in mind that this piece was written in October 2022, so you should check if either of the NDAs has been updated since then.

Bonus postscript (super-nerds only)

Bonterms NDA is licensed under CC-BY, an open source licence which allows you to amend it not only for your specific transaction but also to remix and republish.

oneNDA is licensed under the more restrictive CC-BY-ND (‘ND’ stands for ‘no derivatives’) and deliberately limits amendments, as noted above.

But I’m not going to get further into that topic as it’s a bit nerdish even for a website called ContractNerds!