3 Ways A Non-Disclosure Agreement Will Protect Your Business

A “non-disclosure agreement'' or “NDA” is an agreement where the concerning parties agrees to not share or disclose confidential information to anyone outside the engagement. 

This is done to secure the privacy of the business ensuring that all information is shared only with trusted people and/or those entitled to the information. 

No one outside the agreement would have any knowledge of what's happening within the engagement.

Business leaders or people who are about to work together as a single entity sign a non-disclosure agreement binding them and preventing information leaks. 

Non-disclosure agreements could be between two parties working together or between an employee and the employer. 

In either case, the sole intent here is to restrict information sharing with third-party parties.

What Are The Types Of A Non-Disclosure Agreement?

Having said what a non-disclosure agreement is, the next thing to learn is the different types.

Depending upon which party owes the liability to contain the information, a non-disclosure agreement can be of three types:

Unilateral NDA

The first kind is one where one of the two parties share confidential information with the other, under the influence that anything said or discussed would stay within the two.

Bilateral NDA

As the name suggests, bilateral NDA is one where both of the concerned parties share vital information and pledge to keep all a secret. 

In other words, both parties agree that the information wouldn't be disclosed to anyone except them.

Multilateral NDA

This type of contract is the one where two or more parties are entering into an agreement, with at least one of them sharing information with others, where all must adhere to the agreement and not disseminate the information to anyone outside the agreement.

Why Do You Need A Non-Disclosure Agreement?

As trivial as it may sound, a non-disclosure agreement is something that preserves the authenticity and the viability of a business.

It is not only about restricting the process of information sharing but a means to ensure that company secrets, strategies, and manner of operation are kept internally. .

It safeguards company policies and also lays out the foundation of legal action in case any of the signers break the agreement and leak any information. 

Without the above, companies have no standing when their confidential information is shared with their competitors or any other third-parties.

One thing to note is that the key lies in how you draft the agreement. Here are the two ways/tips to drafting a non-disclosure agreement that helps protect your business.

Define Confidential As A Term And The Scope Of It

When drafting the non-disclosure agreement make sure that the agreement effectively outlines what confidential information means and what is its scope with respect to your business. 

Be specific so as to avoid any discrepancies.

Agreement Terms

Often parties limit their agreement to the time the parties are engaged. Meaning that once the engagement ends, they are free to leak information. 

The best thing to do here is to enforce the agreement for a lifetime.

Non-disclosure agreements aren't only for someone outside the organization but also for within. 

A properly drafted NDA will have a need to know clause, highlighting the information will be used and who can know about it.

Remember, you need a well-curated NDA and not just an agreement. So, make sure to keep them detailed and precise at the same time. 

It will help you work with partners, clients and businesses without hassles in the long run.

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Yoel Molina, Esq. (AKA “Mo”)

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