Non-disclosure agreements (NDA) are routinely used in business settings and can be one of the first steps in creating a business relationship between parties.
However, there are 5 things you need to know about them if you are planning to enter into one.
1. What is a non-disclosure agreement?
A non-disclosure agreement, also known as a confidentiality agreement, is a legally enforceable contract that creates a confidential relationship between two individuals or parties for a specified period of time.
An NDA creates a legal obligation to keep certain information confidential, meaning that it cannot be shared with an outside third party unless specified in the agreement.
Failure to maintain or breaking the NDA can result in legal action being taken against the offending individual or party.
2. What does a non-disclosure agreement protect?
NDAs protect information such as trade secrets, business ideas, research, business modelling, patented information, plans, or other valuable information that an individual or entity does not want disclosed to the public.
Ultimately, the specifics of what is protected under the NDA is decided by the individuals or parties negotiating the agreement.
That means that an NDA only protects that information which is listed, mentioned, or expressly agreed upon within the signed agreement.
Any information, including common knowledge information or other communications between the parties, is not protected if it is not included in the final agreement.
3. What are the elements of a non-disclosure agreement?
There are several basic elements that should be present in the agreement.
The following list is by no means an exhaustive or exclusive list; however, these are the main elements we believe should be a part of every NDA.
>The name and addresses of the parties
>The specifics of what is to be protected by the NDA
>The limitations on the use of the protected information
>The specifics of what information is not protected by the NDA
>Who with, when, and where the protected information can be disclosed or shared
>What time period the NDA covers
>What happens in the case of a breach of the NDA
4. What are the different types of non-disclosure agreements?
There are different types of NDAs, usually based around which individual(s) or parties are restricted from disclosing the protected information.
A Unilateral NDA is usually where one party is restricted from disclosing information related to the other agreeing party and/or required to disclose all information to the other agreeing party. An example of such an NDA would be when an employee is restricted from publicly sharing the information they know about their employer.
A Bilateral NDA, sometimes called a Mutual NDA, is used when two individuals or parties are restricted from disclosing information related to both of the agreeing parties. An example of such an NDA is when two business or entities wish to merge or enter into a joint venture.
5. Can you use a general non-disclosure agreement?
In short, you can but you shouldn’t. NDAs are tailored documents that legal bind the agreeing parties to what is enclosed within them.
For that reason, we recommend preparing a specific NDA each time you enter into an agreement with a new individual or party that covers the specific details you want covered.
Important: Read before you sign. NDAs are legally binding documents; therefore, you should always know what you are agreeing to before you sign one.
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Note: This post has been updated as of 9/17/19.
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Disclaimer: Nothing in relation to the enclosed information should be construed and or considered as legal advice for any individual, entity, case, or situation. The following information is prepared for advertisement use only. The information is intended ONLY to be general and should not be relied upon for any specific situation. For legal advice on your specific situation, we encourage you to consult an attorney experienced in the area of Immigration Law.