How long does an NDA last when selling a business?

A seller who signs a non-disclosure agreement may wonder when it stops mattering. None of the sources reviewed for this page sets a standard length, so the place to look is the signed document’s own term. What the law adds is a few separate rules that run on their own timing. This page covers the duration question only. For what an NDA is and how it is built, see NDAs in a business sale explained.

Read the agreement’s own term

The Business Development Bank of Canada describes a confidentiality agreement as a document, prepared before or at the same time as the letter of intent, in which a party undertakes not to use, disclose or permit the disclosure of confidential information given during the negotiations and the due diligence process, except to evaluate taking part in the proposed transaction. BDC says it is customary to sign one to pursue discussions with the seller. It gives no standard length. Read the term, any end date, and any carve-outs for information that stays protected.

Secrecy can outlast the paper

The Canadian Intellectual Property Office says a trade secret lasts as long as it is kept secret, and that there is no formal registration process for one. It lists non-disclosure agreements among the ways to keep valuable information secret. It also says that once a trade secret is made public it loses its business value and legal remedies become complex, and that enforcing it is the owner’s responsibility. If a secret matters after the term ends, ask your lawyer whether the agreement should keep protecting it.

Returning or destroying information

Some duties are triggered by the deal failing, not by a date. Where PIPEDA applies, section 7.2(1) lets parties to a prospective business transaction use and disclose personal information without the individual’s knowledge or consent if, among other conditions, their agreement requires the recipient to return it to the disclosing organization, or destroy it, within a reasonable time if the transaction does not proceed (s.7.2(1)(a)(iii)). Section 7.2(3) says an organization shall comply with the terms of such an agreement, and section 7.2(4) excludes a transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information. Alberta’s section 22(4) requires the party to whom personal information was disclosed, if a business transaction does not proceed or is not completed, to destroy it or turn it over to the party that disclosed it, if it is still in that party’s custody or under its control; section 22(6) excludes a transaction whose primary purpose, objective or result is the purchase, sale, lease, transfer, disposal or disclosure of personal information. British Columbia’s section 20(6) requires a prospective party in that case to destroy, or return to the organization, the personal information it collected under section 20(2).

A separate clock for a claim

How long you have to sue for a breach is a different question from how long the promise lasts. In Ontario, section 4 of the Limitations Act, 2002 bars starting a proceeding on a claim after the second anniversary of the day the claim was discovered, unless the Act provides otherwise, and section 15 sets a separate outer limit. In Alberta, section 3(1) of the Limitations Act gives a defendant who pleads the Act as a defence immunity if the claimant does not seek a remedial order within 2 years after the date the claimant first knew, or in the circumstances ought to have known, that the injury had occurred, that it was attributable to the defendant’s conduct and that it warrants bringing a proceeding, or within 10 years after the claim arose, whichever expires first, subject to subsections 3(1.1) and (1.2) and sections 3.1, 3.2 and 11. For any other province, check the rules where you are.