A non-disclosure and confidentiality agreement can help protect your business's intellectual property and trade secrets. These and other types of private information are important in every business. They are used to maintain strength, position, financial gain, and market share. At times, it is essential to release confidential information to others so they can perform functions needed to further the business. That's where non-disclosure and confidentiality agreements come into play.

What Is a Non-Disclosure Agreement?

 In order to avoid the risk of leaked information, businesses may use non-disclosure agreements to protect information that has to be communicated with outside parties. However, non-disclosure agreements are useless if they cannot be enforced. 

A non-disclosure agreement (NDA) should be enforced in a number of ways because breached information can result in monetary loss or a damaged reputation. Contracts must be sound and effective in order to prevent the loss of confidentiality.

Not all non-disclosure agreements are made the same, and businesses often assume that a generic agreement is what they need. Businesses must consider the fine details of how to make the agreement enforceable. Being alert to possible complications of enforcement is important because minor differences in language can greatly affect the quality and enforceability of your non-disclosure agreement.

Trade secrets are essentially any concept, method, or piece of information that would not be easily known by competing businesses. This information could be used to harm or compete with the business that originally possessed it. Trade secrets are also kept in relative secrecy, with precautions typically taken to keep the secret private.

In terms of trade secrets, non-disclosure agreements are typically seen as the most comprehensive way to protect the information. NDAs can go by a few different names, and "confidentiality agreement" is one closely related term.

Confidentiality agreements are legal contracts that force a business or private party to treat information (trade secrets) privately and not relay it to any groups, individuals, or businesses without being authorized to do so.

Non-disclosure agreements make sure that parties informed of trade secrets do not relay relevant information to any third parties.

Two terms are used to describe the relevant parties. The party releasing its private information is referred to as the “releasing party,” while the party that gathers the information is referred to as the “receiving party.”

Non-disclosure agreements are typically used in business relationships. These relationships contain information that is confidential and cannot be shared. An NDA works to protect the party releasing information on the off-chance that the information is given out to parties not included in the contract, or if the information is used to harm the releasing party.

When May You Need a Non-Disclosure Agreement?

There are, of course, many different situations that would require a non-disclosure agreement. Here are a few general situations which may require you to consider one:

  • You are in the process of selling a business.
  • You are trying to buy a business.
  • You are holding sensitive information that needs to be kept private among your employees.
  • You are doing business with others who have sensitive information or know your sensitive information.
  • You are hiring someone for a brief period of time, such as a freelancer or contractor.
  • You are trying to maintain agency over information that you can't patent at the moment.

Legal Review

If you are looking to write your own non-disclosure agreement or are planning on using one that is pre-made, make sure to have it carefully looked over by a seasoned attorney. Situations requiring an NDA are incredibly sensitive, and not all of these documents are made the same.

You'll want your agreement to be as specific and relevant to your situation as it can be. This is why it's important to have a second set of eyes to fine-tune your document.

Time Frame

The terms of your agreement should include an explicit amount of time that the agreement will stand. Explicit start and end dates are vital to an effective document.

The start date is typically when the document is signed, but it can be any time. The end date can be trickier. It is possible to have variable end dates. This means that the contract ends when some condition is met. This is usually a condition of death or the completion of a task. Fixed end dates are more concrete, and cannot be misunderstood.

Talk to a Professional

If you need help with non-disclosure agreements, you can post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.