What is an NDA?
A non-disclosure agreement or NDA (aka – confidentiality agreement) is a legal contract in which one person or business agrees to treat or keep specific information confidential or as a business or trade secret or otherwise agrees not to disclose the information to others without first receiving the necessary authorization.
Some features which are helpful for a good NDA:
- Clear identification of the parties involved
- Defines the precise information or type of information to be kept confidential or secret
- Set out the scope of the obligation by the party agreeing to hold the information confidential or secret
- Delineates any and all exclusions from the agreement
- Specifies the duration of the agreement
When should NDAs be used?
NDAs are essential in situations where valuable information about a business, proprietary information, ideas or other intellectual property must be conveyed to or shared with another person or entity, but the originator of the agreement wants assurance that other party doesn’t use the information inappropriately or without approval. Consider these scenarios that could warrant an NDA:
- Employment contract: There may be a need when hiring employees and sharing necessary details about the business so that work can be conducted with clients in a meaningful way.
- Selling or licensing a new product or idea: It is important to safeguard the confidential nature of original information to ensure that it cannot be stolen or reproduced without explicit permission from the owner or creator of the information.
- Seeking investors: When exploring a potential partnership or investment endeavor, it can be crucial to protect the private status of privileged information needed to evaluate the transaction or commitment.
- Using a service provider that must access sensitive company data: When an outside company or contractor is needed to perform a specific or technical service for the business and access must be granted to accomplish the task.
- When documents containing proprietary or other confidential information must be produced in litigation or other legal proceedings.
Why a lawyer should be involved.
Anytime a business decision is made involving confidential or proprietary information, or intellectual property, and how it will be handled – it is wise to seek legal counsel or procure legal services to make sure the business’ interests are protected and the transaction is legitimate and durable. Attorney consultation for NDAs is wise in such situations:
- When presented with one by other person and asked to sign it
- When drawing one up for another person to sign so that business interests are protected
- In the event that the NDA is breached by the other person and a lawsuit must be filed
If you would like expert advice before are entering into a non-disclosure agreement, contact Ilam Smith, Smith Law Office.