Confidentiality Agreements / NDAs

A non-disclosure agreement (NDA) is a legally binding contract that obligates a party to protect an individual’s or a company’s confidential information. This legal agreement is also known as a confidentiality agreement or confidential disclosure agreement.

A non-disclosure agreement creates a confidential relationship which prevents sensitive or confidential information from being revealed. Once a non-disclosure agreement is signed, the party signing becomes legally obligated to maintain confidentiality. They cannot discuss any confidential information protected by the non-disclosure agreement to a party who is not authorized by the agreement. Any leak of this confidential information will be considered a breach of contract.

As such, this legal contract not only builds trust between the parties involved but also provides you with a solid foundation to take legal action if confidentiality is breached.

Non-disclosure agreements fall into two main categories: mutual NDAs and unilateral NDAs. In a mutual NDA, both parties agree to not reveal confidential information. In a unilateral NDA, only one party agrees to not public disclose confidential information.

Both types have the same consequences in the event of a breach. They are simply used in different situations. For example, a mutual NDA is often used for transactions such as mergers and acquisitions. On the other hand, a unilateral NDA is often used in the employment context.

There are many important reasons why a company should take steps to protect confidential and proprietary information. One of the main reasons is to maintain its competitive advantage. It also sends a powerful message that your information is valuable enough to be worth protecting.

Here are some situations where it is a good idea to have a non-disclosure agreement in place:

Confidentiality agreements only protect information that is specified in the agreement. That is why the most important element of a non-disclosure agreement is the definition of “confidential information.”

Defining confidential information isn’t a simple task. This definition should be as precise and comprehensive as possible without being overly broad or ambiguous. If it is too broad, then it will not be enforceable in court.

Some common items to include in the definition are trade secrets, intellectual property, business operations, product information, client information, billing policies, and financial information. The definition should also include processes and data.

Keep in mind the definition should align with your particular business and situation. What works for one business may not work for yours. This is why using NDA templates or re-using someone else’s non-disclosure agreement can be a bad idea.

Non-disclosure agreements also discuss clearly what the party can and cannot do with the confidential information that they receive. For example, in addition to not being allowed to disclose information, they may also be barred from using the confidential information to your detriment. More specifically, they may be prohibited from launching a competing business (non-compete clause) or prohibited from using the information to solicit or recruit others for their own interests (non-solicit clause).

These are general recommended steps and the exact steps that you should take may be different. Specifically, the way in which you enforce non-disclosure agreements will often depend on the terms of the legal agreement and your jurisdiction. For example, the non-disclosure agreement may have an alternative dispute resolution clause which obligates the parties to resolve their issues through arbitration or mediation instead of going to court. This is typically more efficient and cost-effective. It is also a good idea because the proceedings will be confidential, unlike court proceedings which are public.

Consult with a lawyer to ensure that you’re handling the breach in a way that maximizes your chances of success. We can you review, draft and enforce non-disclosure agreements.