It should be noted that writing up an ironclad NDA is best left to the legal professionals. If you can afford a lawyer, this piece of your company contracts can go a long way in sparing you the cost of weightier legalities (like industrial espionage) in the future. Thanks to business legal insurance, you can keep a lawyer on hand for any eventuality your organization encounters.
What is Non-Disclosure Agreement?
A non-disclosure agreement (NDA) is a legal contract between two parties that outlines confidential information that either party wishes to share between each other, but want to restrict access to.
There are two forms of non-disclosure agreement. The first is a mutual agreement or a one-sided agreement. This type of NDA applies when only one party will be sharing confidential information with the other. A mutual NDA, on the other hand, is intended for situations where each party may potentially share confidential information.
Key Elements Of A Confidentiality Agreement
- Identifying the parties to the agreement
- Definitions of and exclusions from what information is considered confidential
- Obligations of recipient(s) regarding the confidential information
- The disclosure period
- Provisions restricting the transfer of data
- Terms and conditions of the confidentiality (i.e. time period of confidentiality)
- Types of permissible disclosure
- The law and jurisdiction governing the parties.
When Are Non-Disclosure Agreements Necessary?
There are a few instances, in which you may want to include a non-disclosure clause in some of your contracts.
- Presenting an invention, game-changing development, or business idea to a potential partner, investor or distributor.
- Sharing financial information, marketing strategies, and other delicate information with a prospective buyer of your business.
- Showing a new product or technology to a prospective buyer or licensee.
- Receiving services from a company or individual who may have access to some sensitive information in providing those services
It’s important to note, however, that many legal professionals don’t advise start-ups to use confidentiality agreements when approaching venture capital investors. It’s highly unlikely that many venture capitalists will be open to signing such agreements.
That said, it is equally important to have a legal professional involved when writing up a non-disclosure agreement. There are plenty of NDA templates online, but if you want your NDA to be truly iron-clad, it’s best to have a lawyer oversee the process. Worried you can’t afford to have a lawyer on standby? Business Legal Insurance helps you find legal representation for your business that you can afford. Apply for a quote today!