The Disclosing Party shall pay the Receiving Party the sum of [AMOUNT] GBP (the "Fee") for the Receiving Party's undertaking in this Agreement. The Fee shall be payable within [NUMBER] days of signature of this Agreement by both parties. The Fee is non-refundable.
This clause covers payment terms for the confidentiality agreement. In simple terms:
- It states the amount the Disclosing Party will pay the Receiving Party. This is known as the Fee.
- The Fee is for the Receiving Party agreeing to keep the Disclosing Party's information confidential as outlined in the agreement.
- It specifies when the Fee is due. In this case, within a certain number of days after both parties have signed the agreement.
- It notes the Fee is non-refundable. Once paid, the Disclosing Party cannot get the money back if they cancel or terminate the agreement early.
In summary, this establishes the upfront payment the Receiving Party will receive as compensation for taking on the confidentiality obligations.
The Disclosing Party pays this Fee in exchange for the Receiving Party keeping their information secret per the terms of the agreement. Specifying non-refundable makes clear the Fee is not contingent on the full term of the agreement.
Payment and fee clauses within confidentiality agreements have evolved over time along with NDAs themselves. Early NDAs were often informal "gentlemen's agreements" that relied on honor and trust between parties without compensation.
But as NDAs became formalized legal contracts, payment terms were sometimes included to provide consideration—the value exchanged that makes a contract legally binding.
By the 1980s and 90s, it had become relatively common to include payment clauses in NDAs, especially when sensitive information was being extensively shared or evaluated. Compensating the Receiving Party helped ensure their full commitment to confidentiality obligations. Specifying upfront non-refundable fees also gave Disclosing Parties more confidence in information sharing, knowing the Receiving Party couldn't back out without consequence.
Today, contractual consideration can take many forms beyond direct payment, such as mutual promises between parties. But when included, payment clauses continue to provide monetary motivation and legal consideration.
They also allow valuation of confidential information, with higher fees indicating greater sensitivity and importance. Fee terms have now become a standard option in NDAs to directly incentivize confidentiality.