BUSINESS LAW & LITIGATION

What is a Non-Disclosure Agreement (NDA)?

Businesses worry about protecting the security of their valuable information from outsiders. Non-disclosure agreements, also known as “NDAs” or confidentiality agreemens, protect sensitive company information by prohibiting the party who is receiving confidential information from sharing or disclosing that information. When it comes to the creation and implementation of a confidentiality agreement, it is advisable to speak to a confidentiality agreement attorney.

An NDA may define specific information that is considered to be confidential, what the party’s obligations are in regard to confidentiality and a defined time period for confidentiality. Non-Disclosure Agreements (NDAs) may be used by companies who are seeking funding, utilizing independent contractors or to prevent employees from sharing sensitive information with another party.

Protect Your Company With a Non-Disclosure Agreement

An NDA can also be used any time that confidential information is disclosed to potential investors, creditors, clients or suppliers. An NDA is not exclusively for big business; it can also be used for contractors or freelance workers. Businesses typically enforce Non-Disclosure Agreements (NDAs) to deter the theft of intellectual property or ideas.

Examples of sensitive company information or content a business may want to protect with NDAs include:

• • Client Contact Lists
  • Accounting Documents & Information
  • Proprietary Formulas / Secret Recipes
  • Sales & Marketing Strategies
  • Future Plans & Investments
  • Manufacturing Processes
  • Engineering Processes

What is Typically Included in a Non-Disclosure Agreement?

Participants – The participants agreeing to the NDA must be clearly defined in the NDA.

Terms – Includes what information and for how long the information needs to be kept confidential. Some Non-Disclosure Agreements (NDAs) require a person to keep information confidential for an indefinite period of time.

Information – This section should list the exact information to be kept confidential and should be as specific as possible. It should also list how restrictive the requirements of the confidentiality agreement will be. For example, does the NDA apply only to written documents or also verbal discussions?

Breach Consequences – What happens if there is a breach? This section will describe resolution methods or consequences that will be enacted if the NDA is breached. This could involve payment for damages, arbitration or even a court appearance.

Types of Confidentiality Agreements and NDAs

Although the content of each NDA can be unique, there are two primary types of non-disclosure agreements: Unilateral and Mutual.

A Unilateral Non-Disclosure Agreement says that one party agrees not to reveal confidential information that they learn on the job. These agreements usually cover a business’s trade secrets, copyright information, and research conducted. Contract and corporate researchers at large companies or universities are sometimes required to sign Non-Disclosure Agreements. The unilateral NDA is most common type of agreement.

Mutual Non-Disclosure Agreements are agreements between businesses that are engaged in a joint venture where proprietary information is shared. An example would be a computer company and a software tech company working together and sharing trade secrets.

Companies may also utilize Non-Disclosure Agreements to protect their interest when interviewing and hiring potential employees, or presenting an invention to a potential investor.