What is a Non-Disclosure Agreement?
A non-disclosure agreement (NDA), also called a confidentiality agreement, confidentiality disclosure agreement, or non-disclosure contract, is a legal contract that establishes a confidential relationship between a person who has private information and the person with whom they plan to share the information.
For example, a startup company with an edge on the current market may ask new hires to sign an NDA to prevent information leaks to competitors.
What is the purpose of an NDA?
NDAs are used to protect sensitive information. A signed contract gives the business entity the ability to pursue legal action if a person shares information they shouldn’t.
An NDA contract should take care of three things:
- Establishing what information can be shared and what is confidential
- Creating a legal obligation for discretion
- Protecting the rights of the business entity (whether it’s a patent, client list, new product, etc.)
When should I use an NDA?
If you have sensitive information that you don’t want to be shared with the general public or your competitors, you should use an NDA to protect your organization’s interests.
There are five scenarios where an NDA is prudent:
- Product Sale or Licensing: An NDA can prevent sharing technical, financial, or proprietary data with third parties
- Employees: An NDA can guarantee that employees won’t disclose sensitive data while they’re employed or after they leave
- Partners: An NDA can protect information shared when negotiating partnerships or investments
- New Clients: Depending on the client-business relationship, you may want to use an NDA to identify what information new clients can and cannot share
- Mergers and Acquisitions: An NDA prevents sensitive data from being shared outside of the entities, intermediaries, and brokers involved in a merger or acquisition
How to create an NDA?
To create an NDA, you’ll want to sit down with your business’ lawyers or use an online legal service. You’ll determine whether you need a unilateral NDA (one party agrees not to disclose information) or a mutual NDA (both parties agree not to disclose information). Information you’ll need to draft your contract includes:
- Information about the parties involved
- An outline of which information is confidential
- Ramifications for breaches of contract
- Scope of enforceability
- How long the agreement is viable
- Exclusions to confidential information
- How sensitive information should be dealt with at the time of contract or partnership termination
Knowing what you want to include in your NDA before sitting down for your meeting or filling in the template with an online provider will streamline the process.
How to negotiate NDA contracts with AI technology?
Like every other contract you sign on behalf of your business or yourself, the agreement should be carefully reviewed before you put pen to paper.
BlackBoiler offers a seamless NDA review process with our powerful AI contract markup software. Our solution reviews and marks up contracts right in track changes just like an attorney at a fraction of the cost and twice the speed. You’ll reduce your risk with little effort.
See how BlackBoiler’s robust AI contract markup software can eliminate legal loopholes and suggest more concise language by scheduling your demo today.
