Non-Disclosure Agreement

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 or invention with others.
To be able to share new knowledge and original work requires 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 it’s an agreement that allows you to openly talk about the idea or the invention you have without them disclosing the invention to anyone else.

So, you have an idea, an invention, of a new product and you need to get it manufactured. Before you send the manufacture any details of your product or idea, have them sign a NDA.

An NDA is utilized for the following:

  • Business Plans
  • Mathematical and Chemical Formulae
  • Trade Secrets
  • Technical Drawings or Designs

Types of Non-Disclosure Agreements

1. NDA’s for Employees

When leaving a company, an employee may have the opportunity to share trade secrets of your company or specific to your industry. The best way to help prevent this is through the use of a NDA that specifies confidential topics, practices, etc.

2. Precedent Confidentiality Agreement

This NDA is primarily used for mergers and acquisitions when a company wants to look into your books and assets.

3. Commercial Relationship

An NDA is utilized to ensure that confidential information will not be later disclosed.

4. 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 neither will disclose the information.

Ways to prepare a Non-Disclosure Agreement

Templates can be purchased off-the-shelf that allow you to adjust them to better reflect your news. Law Depot is an online self-service website that allows you to customise your own NDA.

Key Terms of a Non-Disclosure Agreement

Here is a list of key terms used in NDAs:

  1. Confidentiality – Legal principle that maintains secrecy between parties.
  2. Owner or disclosure – Name of the owner or business disclosing the information.
  3. Recipient – The name of the person or company receiving the information.
  4. 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.
  5. Subject –The information and documents that will be the subject of the confidentiality agreement.
  6. Penalty Clause – A fixed amount of compensation should the recipient breach the agreement.
  7. Confidentiality Clause – The clause that requires both parties to keep the existence of the contract a secret.
  8. Term of Engagement – This is the duration of the contract.

Issues When Signing a Non-Disclosure Agreement

The NDA is a binding contract that allows parties to share information. If a party breaks the contract and leaks information, the party can then be taken to court for damages. You can, however, get an injunction from a business partner if you feel that he is about to breach the agreement. This is also a good reason to get a Patent Pending application.

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