Why NDA is such an important document and how it works

Aug 02, 2018

The most crucial asset for an entrepreneur and his business is certainly the information it holds. In business there are numerous reasons why you may want to share your confidential information with another party (i.e. your contractor, supplier and advisor).

The one of the most practical way to protect your confidential information provided to another party is through the use of a Non-Disclosure Agreement (NDA), which is sometimes also referred to as a “Secrecy Agreement” or “NDA.”

An NDA is a legally binding contract that requires parties to keep confidentiality for a defined period of time. These days there are very few businesses that base their operations on oral agreements; otherwise the NDAs would not be as commonly used as they are.

It’s up to the parties to decide what would be considered confidential and what is not. Confidentiality can apply to documents, designs, sketches, analyses, source codes, marketing plans, manufacturing processes and technical procedures.

These agreements can be one-side agreements where only one party is disclosing confidential information to the other or these can be mutual agreements, where both parties make disclosures and are bound to keep each other’s information a secret, unless given permission to do otherwise.

The NDA does not only provide for monetary remedies in the event of a breach but more importantly, provide injunctive relief to stop any further breaches from occurring. In this case, NDA doesn’t have to be long and complicated. In fact, the good ones usually are not more than a few pages long.

The crucial provisions of any Non-Disclosure Agreements: (I) Identification of the parties; (II) Definition of “confidential information”; (III) the scope of the obligation by the receiving party; (IV) the exceptions from confidential agreement; (V) the term of the agreement.

Bring in the pros: Offshorelicense will get to know your business, figure out what you need, pick the right template to work from and draft the right clauses to use.

Either way, you’ll now be more prepared when it comes to signing or handing over your NDA for others to sign.

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