Non-disclosure Agreements (NDAs) are an essential part of business life, especially for executives working in the corporate world. These contracts are designed to protect confidential information and trade secrets from being released to the public or competitors. NDAs can be long, complicated documents, raising a myriad of questions in the minds of business people. Here, we have attempted to answer the most frequently asked questions regarding NDAs among business executives in Chicago.

What is an NDA?

An NDA is a legally binding contract between two or more parties. The parties might be two companies, or a company and a person. In an NDA, the disclosing party agrees to provide confidential information to the receiving party. The receiving party agrees to protect the disclosed information from unauthorized use or disclosure and to keep the information confidential. NDAs are also sometimes referred to as confidentiality agreements.

Who needs to sign an NDA?

Anyone who may come into contact with confidential information should sign and consent to an NDA. This includes employees, vendors, temporary workers, contractors, business partners, investors, research and development teams, consultants, and other third parties.

Why are NDA's important?

NDAs are important as they help to protect a company’s confidential information, intellectual property, and trade secrets. Without an NDA, confidential information can easily be leaked, stolen or misused. This can lead to significant losses in terms of money and reputation, resulting in harm to the company’s long-term prospects.

What is included in an NDA?

NDAs typically include the following sections:

• A provision giving the discloser exclusive rights to use the confidential information;

• An agreement that requires the receiving party to keep the information confidential and not to disclose it to anyone;

• A statement defining the “confidential information” to be protected;

• A clause that limits the recipient’s right to use the confidential information;

• A term determining how long the NDA is to remain in force;

• A clause detailing the obligations of each party after the NDA expires; and

• A provision specifying the applicable law in the event of a dispute.

Can an NDA be broken?

Yes. An NDA can be broken if the recipient of the confidential information fails to abide by the terms of the agreement. This can result in legal action being taken against the recipient.

What happens if an NDA is violated?

If an NDA is violated, the discloser may take legal action against the recipient in a court of law. This could result in penalties including the payment of damages and/or the return of any confidential materials.

Who enforces NDAs?

NDAs are enforced by a court of law. If either party violates the terms of the agreement, the other party may file suit in a court of law to obtain compensation and/or injunctive relief (an order from the court requiring the party to stop engaging in the prohibited activity).

Are NDAs enforceable in all jurisdictions?

No. NDAs are subject to the laws of each jurisdiction. It is thus important to ensure that any NDA you sign is enforceable in the jurisdiction in which it is intended to be used. This is especially important when entering into an NDA with a party based in a different jurisdiction.

What is the duration of an NDA?

The duration of an NDA depends on the provisions included in the agreement. Typically, NDAs have a specified duration of one or two years, but can be terminated earlier if desired.

What should I do if I have questions about an NDA?

If you have questions about an NDA, you should consult with experienced legal counsel. Working with lawyers who are based in Chicago and understand local regulations can give you the best advice regarding your NDA. UpCounsel’s network of experienced attorneys can provide high-quality, cost-effective legal services for individuals and businesses of all sizes.




Non-Disclosure Agreement