Contractual Confidence: When to Use a Non-Disclosure Agreement

Are your company’s trade secrets secure? A non-disclosure agreement (NDA) can be used to protect almost any confidential information tied to your business. When you discuss your company’s information with others, an NDA can impose a legal obligation to keep that information secret. Certain industries may benefit more from NDAs, such as the computer industry, where leaked information can play a part in relinquishing a company’s competitive edge. As a legal contract held between at least two parties, a non-disclosure agreement can outline exactly what knowledge or information you need to keep confidential. You might use an NDA in one of the following common scenarios.

Letting employees access sensitive information

Some of your employees may need access to confidential and proprietary information in order to do their jobs. An NDA can stipulate that they only use the information for a specific purpose, which legally prevents them from divulging your company’s secrets, including information about your clients, trade secrets, and more.

Starting a new project

If you’re working on a new idea for an invention, a business, or a similar endeavor, you may want to present it to potential partners, investors, or distributors. With the legal protection offered by an NDA, your prospective partners cannot take your idea and develop it on their own, investors cannot disclose your ideas to others, and so on.

Developing a new product

You may be working on a product or technology that you want to keep secret until a certain stage in the process. An NDA can prevent potential buyers or licensees from discussing the product without your knowledge.

Receiving services from another company

Your company may decide to outsource work to another company or retain the services of an independent contractor, such as a graphic designer or copy editor, who needs access to information you’d rather keep private. You can have them sign an NDA to keep them from sharing information with your competitors.

Selling your business

Say you are thinking about selling your business. You may need to disclose confidential information, such as your business strategies, to potential buyers in order to gain their interest. An NDA prevents them from using your information to their advantage without buying the business.

Take care when creating a non-disclosure agreement, because it may not always provide you with comprehensive protection. An NDA needs specific language in order to hold its weight in a legal setting. Before you draft your next NDA, you should seek help from an attorney who has plenty of experience writing contracts. Contact Calevoso Law for help creating a strong agreement that will defend your sensitive information from those who would misuse it. We’ll make the process simple and effective.