Companies usually have information that is not meant to be part of the public record. Releasing information like the inner workings of company management or the secret formula to make a product can cost a company its reputation, standing, or profits. Some employers require their employees to sign non-disclosure agreements, but they may be used in other business situations where confidential information is shared. It’s important to understand non-disclosure agreements before preparing or signing one.
A typical non-disclosure agreement, or NDA, is a legal document that seeks to protect information from being disclosed or used without permission. A typical NDA:
- Identifies the parties involved
- Defines what it considered confidential information
- Outlines the confidentiality obligation
- Notes any exclusions from the confidentiality agreement.
The phrase “used without permission” is important. Say you release proprietary information to a potential buyer of your company. Then the deal falls through. An NDA prevents the buyer from benefiting from the information you shared. The buyer cannot take your information and start a rival company using your trade secrets, for example.
Employers – Not the Only Ones Using NDAs.
NDAs are common in certain industries or jobs that have access to confidential information. They also are useful in other situations:
- Do you have a unique business idea? Have you invented or created something you’d like to show to potential partners, buyers, or investors? Then an NDA may protect your product from being stolen or your ideas from being used without your permission.
- If you’re selling a business, you may have to release confidential information to potential buyers. An NDA is intended to protect that information from going any farther.
Not Always a Two-Way Street.
Some NDAs are mutual, some are one-sided. Mutual NDAs are used if you and other parties are sharing proprietary information or ideas. However, if only one party is sharing, the NDA may be one-sided, protecting only the party that presented the information.
If Those Protections Are Breached…
Often, a non-disclosure agreement will include language covering disputes or unfortunate situations where one party blabs trade secrets protected by the agreement. If a party to an NDA breaches the agreement, arbitration may be one option.
Call Us to Learn More about Non-Disclosure Agreements.
If you’re being asked to sign an NDA, or feel you need to have someone else sign one, set up an appointment. The attorneys at Dillon Law Group, PLC understand business law. We give your concerns the individual attention they deserve. Please contact us at 757-962-4796 to set up an appointment or use the Contact Form on our website, https://www.dillonlawgrp.com/. We have offices in Virginia Beach and Newport News.