A non-disclosure agreement (NDA) is also known as a confidentiality agreement which is a legal contract between you and another party preventing them from sharing your information with others.
To be able to share new knowledge and original work, it required a lot of trust. It is essential to consider confidentiality before seeking a company to develop your ideas.
What is a Non-Disclosure Agreement?
A Non-Disclosure Agreement (NDA) is a low cost way to protect your business.
When you and another party sign a NDA its an agreement that allows you to openly talk about the idea you have without them disclosing the idea to anyone else.
So you have an idea of a new product and you need to get it manufactured. Before you send the manufacture any details of your product or idea you need to get them to sign a NDA.
What will a NDA cover you for?
- Business Plans
- Mathematical and chemical Formulae
- Trade Secrets
- Technical Drawings or Designs
Types of Non-Disclosure Agreements?
- NDA’s for Employees
When leaving a company an employee may share trade secrets of your company, the best way to help preve this is with the use of a NDA. The best way to do this is in writing and specifying exactly what is confidential.
- Precedent Confidentiality Agreement
Mainly used for mergers and acquisitions when a company wants to look into your books and assets.
- Commercial Relationship
Use a NDA to ensure confidential information will not be disclosed later.
- One-way and Two-way NDAs
One way NDA is used when one party is only sharing information with another party
Two way NDA is when both parties are sharing information and that neither will disclose their secrets.
Key terms of a Non-Disclosure Agreement
We have made a list of key terms used in NDAs that may help you understand
- Confidentiality – Legal principle that maintains secrecy between parties.
- Owner or disclosure – Name of the owner, business disclosing the information.
- Recipient – The name of the person company receiving the information.
- Statement of Reasons – Paragraph defining the context in which the information will be disclosed and why the parties want to make the information the subject of the contract.
- Subject – This is the information and documents that will be the subject of the confidentiality agreement.
- Penalty Clause – A fixed amount of compensation should the recipient breach the agreement.
- Confidentiality Clause – This Option is the clause that requires both parties to keep the existence of the contract a secret.
- Term of Engagement – This is the period of length the contract lasts for.
Issues when signing a Non-Disclosure Agreement
The NDA is a binding contract which allows parties to share information. If a party breaks the contract and leaks information they can be taken to court for damages.
You can however get an injunction from a business partner if you feel he is about to breach the agreement.
This is also a good reason to get a Patent Pending application.