Non-Disclosure Agreements (NDAs) are mutual agreements entered by business partners to safe-guard each other’s proprietary information pertaining to business. An NDA is a potent tool to protect your business from any unauthorized use of information, data, plans, pricing and/or strategies. So what if you have just started your business and are small? In case you are dealing with sensitive information/ data with an outside partner or your own employee, make sure that a well-written NDA is in place so that there is no breach of trust.
Why do you need an NDA?
• To define the terms and conditions between you and your business partner, employee or any other third party for exchanging and using confidential information and materials.
• To keep sensitive information confidential,
• To outline resolutions for agreement violations
Types of NDA:
Mutual NDA – where both parties, you and your counterpart, have confidential information to protect
• One-way NDA – where only one you or your counterpart is disclosing confidential information In any case, if either party violates the NDA, the other party may sue for relief to stop the release of information and recover damages after due calculation.
What should an NDA cover? An NDA could be entered into for any number of reasons – product plans, business plans, financial plans, marketing strategies, digital marketing blue prints, software programs or anything unique to your business.
Hence, the content of an NDA will differ and will be solely dependent on its scope. However, the following are a few basics that are more or less applicable to all NDA types.
Take a look:
• Identify the confidential information and define it in clear words. Include every item that you consider vital for your business and that we needs to be protected. In case you are entering into a collaboration with another business, pre-empt the information/data-sharing needs that may arise in the scope of that relationship and specify in clear words that the same cannot be made public or used without due authorization.
• Make an exception list of what all will not be covered in the NDA such as information or data that is not sensitive and can be used freely. This helps in de-cluttering the NDA
• Specify the obligations of the partner, employee, third-party etc. This will include the dos and don’ts.
• Specify the time period for which the agreement will hold good.
• The next step is to specify the liabilities involved in case of a breach. This will include the damages that the partner, employee, third-party etc will have to bear
• Finally, the NDA should also include the names of the laws and provisions thereof which will apply in case of breach. It should also be specified whether the legal fees will be available to the winning party in case of the breach of or a dispute regarding the agreement If both parties follow the non-disclosure agreement, things will run smoothly and the agreement will serve its purpose.