In business it is important to know that your confidential plans stay confidential. One common way that companies can ensure their business stays private is through a Non-Disclosure Agreement, which is also called a “Confidentiality Agreement” or “NDA.” The following explains what an NDA is, and what it can do for your business.
Should I Get an NDA?
Non-Disclosure Agreements are generally used when you want to share an idea, but want to ensure the idea isn’t stolen or shared with others without your approval. Here are a few situations where an NDA is used:
- When presenting an idea or invention to a potential investor, distributor, or business partner.
- Presenting an invention or business idea to a potential partner, investor, or distributor
- When receiving services from a person or company that might have access to sensitive data.
- Allowing employees access to confidential information during the course of their job.
The Key Elements of Non-Disclosure Agreements
Non-Disclosure Agreements are usually only a few pages long. NDAs include the following key elements:
- Identification of parties
- Definition of what is confidential
- The scope of the confidentiality obligation by the receiving party
- Any exclusions from confidential treatment
- The term of the agreement
What Is Confidential?
This section of the NDA defines what confidential information means. Will all information be confidential? Will it only apply to things marked “confidential?” Is oral information also considered confidential?
Oral information can be hard to place in an NDA agreement. Some parties insist that only information in writing can be confidential. Usually a compromise is made where oral information can be considered confidential, but the disclosing party must confirm that the information is confidential shortly after it is disclosed.
More Provisions for Your NDA
Here are a few more provisions that business may add:
Jurisdiction in Case of a Dispute. If there is a dispute, the disclosing party will be handled only in your city.
Employee Solicitation. If the other party has access to your employees, this provision keeps them from soliciting or hiring your employees for at least 24 months.
Injunction. Ensure there is a clause that gives you the right to stop the other party from violating the agreement.
NDAs are simple documents that add an extra layer of protection to your communications and business. Contact a lawyer to figure out if an NDA is necessary for you.
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