What is a non-disclosure agreement?
A nondisclosure agreement (NDA) is a contract between two parties (individuals or businesses) that’s designed to permit sharing of trade secrets and other confidential information without it being disclosed to third parties or to the public in general without the prior express permission of the party sharing the data.
Although commonly referred to as an NDA, a non-disclosure agreement is sometimes labeled with other names, such as “confidentiality agreement.” How the contract is titled is less important than what it contains for purposes of protecting data.
Mutual or unilateral confidentiality agreement?
The agreement can be mutual (reciprocal) or unilateral. Mutual NDAs are frequently used where both parties are sharing confidential information. In contrast, a unilateral NDA is common where only one party is sharing confidential data with the other rather than it being a mutual exchange.
3 important parts of an NDA
Although the terms of your NDA will vary depending upon a variety of factors, here are three of the common issues your confidential agreement should cover.
- Confidential Information Defined. Your NDA should include a definition of what constitutes confidential information. Equally important, the NDA ought to make it clear what information is considered nonconfidential. This prevents misunderstandings between the parties and reduces the risk of litigation for breach in the process.
- Restrictions on Use. Your non-disclosure agreement should make it clear how the shared confidential data can and cannot be used by the parties to the agreement, including the protection of intellectual property (IP) rights. Can copies be made? Will the confidential information be returned by the recipient or destroyed at a certain point. If destroyed, what type of proof will be required? For example, will the recipient be required to provide an affidavit of destruction?
- Remedies for Breach. How will violations of the confidentiality agreement be handled? Will the nonbreaching party be able to go to court to obtain an injunction?
How to get an NDA for your business
If you need a nondisclosure agreement prepared or an existing confidentiality agreement reviewed, the first step is to set up a phone consultation with Internet Lawyer Mike Young.