In any form of business arrangement, confidentiality is key. Whether this is day to day business information, knowledge of product innovation, customer details or high value data, following a non-disclosure agreement is imperative when dealing with third parties.
What is a Non-Disclosure Agreement?
A non-disclosure agreement (NDA) is a legally binding contractual agreement created to protect sensitive or high value data from being disclosed with third-party associates, such as investors, employees and business partners. When considering your business, information regarding your ideas or strategies will need to be communicated with those associates. By completing a legally binding NDA, you’re protecting all communication, ensuring details remain confidential.
When considering the structure of your non-disclosure agreement, information should be specific and include the form of protection, those given eligibility to receive the information, the period of disclosure, the termination of agreement and remedies if a breach of contract occurs under law. Once formatted, the non-disclosure agreement will need to be signed by all relevant third parties prior to the communication of business details.
When should I use a Non-Disclosure Agreement?
A non-disclosure agreement is recommended if two businesses are looking to collaborate. This should be in place prior to the discussion of business details, product developments or intellectual property to ensure that information isn’t miscommunicated or shared with external parties.
An NDA is also recommended for those looking to work alongside and share details with investors, business associates or senior employees. If you’re inventing a product and looking to complete a patent application for protection, it is vital that a non-disclosure agreement is submitted prior to shield your ideas from untrustworthy or unconnected parties.If you are looking to work alongside and share information with the following third-parties, a non-disclosure agreement is highly recommended:
Any other business associates or outsourced agencies.
Once a non-disclosure agreement has been signed by all appropriate third-parties, it is recommended that you carefully check that all details are correct prior to disclosing any information. Once you are happy with the level of protection, it is important to record which information has been disclosed to whom moving forward. This will act as a further form of protection when considering the details of your non-disclosure agreement.
Types of Non-Disclosure Agreements to consider
A two-way non-disclosure agreement: If both businesses/parties are looking to collaborate and share confidential information, a two-way NDA is recommended. This type of non-disclosure agreement will need to be signed by each party who has any form of involvement with sensitive or high value detail. This will ensure that those involved are legally bound throughout any communications.
A one-way non-disclosure agreement: This type of NDA is recommended if one party involved is looking to disclose business related information of high value. This will usually include those looking for and working with investors, senior employees or business associates.
Confidentiality letters: This is where an agreement of confidentiality is placed and communicated without following the formality of a one or two-way non-disclosure agreement.
When considering the communication of any business-related details, having a non-disclosure agreement in place will protect you. Just ensure that it is legally binding, has been drafted with specific structures, has been carefully checked and implemented when dealing with any third-party.