Have you ever had to sign a non-disclosure agreement? These agreements are often required in business settings, but can also be found in other areas of life. They are designed to protect sensitive information by ensuring that the person who discloses the information does not disclose it to anyone else. But what happens if you inadvertently disclose confidential information? Can you be held liable for damages? This post will explore the ins and outs of non-disclosure agreements, as well as offer you a free non-disclosure agreement template to give you an idea of what kind of information is typically included in one of these documents.
What is a Non-Disclosure Agreement?
A non-disclosure agreement is a legal document between two or more parties designed to safeguard confidential information between the parties involved.
Non-disclosure agreements can also be known as confidential disclosure agreements, non-disparagement agreements, confidentiality agreements, and so on. There can also be different types of confidential information parties would rather keep private, like business and marketing plans, strategies, financial budgets, business methods, etc.
Why You Would Need a Non-Disclosure Agreement?
Let’s look at it this way. You’ve sat down, and this great thought comes to mind like a brilliant business idea where you can attract potential clients and investors. But at the same time, you’re thinking about protecting your vision. This is when you might start to think about utilizing an NDA.
Non-disclosure agreements are widespread in today’s business, and its to protect any confidential information that is shared or exchanged between two or more parties, customers, etc.
Types of Non-Disclosure Agreements
There are two types of non-disclosure agreements, they are:
- Unilateral agreement
- Mutual non-disclosure agreements
Unilateral agreements – The unilateral agreement is the most common one, and this type of agreement is usually shared between contractors and employees. The unilateral agreement is considered a one-way agreement because only one individual keeps the information confidential.
Mutual NDA – This type of NDA is the less common one, and it involves two parties meeting together to discuss their business ideas which involve sensitive information. Both parties usually vow to protect each other’s confidential information, and the mutual NDA could also be called bi-lateral NDA’s.
How to Create an NDA
Some common clauses someone needs to be sure of before creating a non-disclosure agreement are:
- Start your NDA by outlining the names of each party and the relationship that exists.
- State the type of agreement. This agreement could be either unilateral or mutual.
- Describe or define the information that needs to be stated in the agreement.
- State the obligations and responsibilities of the parties that are involved.
- Put in the time period.
- State the governing law clauses, enforcement, and severability of the agreement.
- Then lastly, include signatures.
The Benefits of Having an NDA in Place
Having a non-disclosure agreement in place is essential and worthwhile. Here are a few advantages of having one:
- Having an NDA maintains the confidentiality of information or trade secrets valuable to a business.
- Confidential information through an NDA is safe, and either party wouldn’t go and disclose information to other people unless permission is given.
- By having a non-disclosure agreement, either party is confident enough to preserve their business relationship and keep information safe.
- Having a non-disclosure agreement offers protection and security.
- Using a non-disclosure agreement provides someone with defined remedies in any situation where confidential information is stolen. These remedies could include penalties or procedures that would follow if the contract is in breach.
When Not to Use an NDA
Non-disclosure agreements are used legally and are essential to protect sensitive information from being spilled. Despite tons of benefits of using a non-disclosure agreement, there are also some situations where an NDA should not be used. An NDA should not be used:
- To prevent a worker from discussing harassment or discrimination at the workplace.
- In workers’ contracts, which can deter them from making harassment or unfair claims against you in the future.
- To prevent workers from whistleblowing, disclosing information of criminal activity, and so on, that is the law.
Legal Details About NDAs and What They Can Cover
As mentioned earlier, NDA’s are legal documents, and by signing this document, someone agrees to the terms and conditions presented to them. The non-disclosure agreement protects the details of a merger, trade secrets, client information, etc.
If an employment contract contains a non-disclosure agreement, an employee should be given ample time to read and fully understand the terms of the document. An NDA which prevents someone from making future harassment claims is not suitable, and once an NDA is signed, you would need a copy for yourself. Furthermore, always seek advice before signing the non-disclosure agreement.
If an individual in the workplace has signed an NDA and after experiencing harassment or discrimination, they can always seek legal advice from a lawyer.
You can download the non-disclosure agreement template for free here: