How Can a Non-Disclosure Agreement Help Me Protect My Business?
June 16, 2020
Effectively using business contracts is an essential part of growing a successful small business. A non-disclosure agreement (NDA), also called a confidential disclosure agreement or confidentiality agreement is a contract that prohibits the participating parties from sharing sensitive information. Business owners may use NDAs when disclosing confidential information to employees and consultants, during business sales or purchases, and when meeting with potential investors. However, a non-disclosure agreement is only beneficial when it is executed accurately and does not contain major mistakes. This is why it is best to work with an experienced business lawyer when drafting non-disclosure agreements and other types of business contracts.
The Basics of Non-Disclosure Agreements
In an ideal world, a business owner would be able to simply ask an individual not to share the sensitive business information to which he or she is privy. Unfortunately, this is not how business dealings work in the real world. The best way to prevent confidential information from being used against a business is to have the party receiving the information to sign a legally binding confidentiality agreement. A business owner may use an NDA to protect:
Business operations and financial information
Customer names and contact information
Intellectual property including copyrights, patents, and trade secrets
Marketing techniques and market research data
The two main types of NDAs are mutual agreements and unilateral agreements. In a mutual non-disclosure agreement, both parties agree not to share information protected by the agreement. In a unilateral agreement, one of the parties agrees to keep proprietary information provided by the other party a secret. If a party signs an NDA and then violates the terms of the contract by sharing or misusing confidential information, the non-breaching party may be entitled to monetary damages.
Required Elements in A Confidentiality Agreement
A confidentiality agreement must meet certain criteria in order to be legally enforceable. The key pieces of information that must be included in a non-disclosure agreement include:
Identification of the parties subject to the NDA: It may seem like identifying the parties who are agreeing to the NDA would be easy. However, it is important to consider all of the individuals and companies that may also be part of the agreement, such as any affiliated companies, partners, or agents.
Designation of what is information is considered to be confidential: Is all of the information the parties receive considered confidential? Is oral information protected by the agreement or only written information? It is essential to clearly identify what information is protected by the contract.
The exclusions from confidential treatment: What information is not covered by the agreement?
The term of the agreement: Most NDAs have a two-year term. However, the terms you place on your NDAs will depend on the nature of the industry and the type of information the confidentiality agreement seeks to protect.
Contact a Greenwich Business Contract Attorney
Owning a business is a major responsibility, and there are many legal aspects to make sure its operations run smoothly. A non-disclosure agreement can help you ensure that confidential business information is not used to your detriment. For help with drafting effective non-disclosure agreements and other business contracts, contact the Law Offices of Peter V. Lathouris, LLC. Call our office today to schedule a free initial consultation to discuss your needs with our skilled Stamford, CT business lawyers.