To stay ahead of the competition and remain relevant in the market, businesses and companies must keep their innovative ideas, new products, or working projects a secret lest they get leaked into the hands of competitors. And these are what a Non-Disclosure Agreement seeks to solve.
NDA or Non-Disclosure Agreement is a legal document used to protect such sensitive information and keep it only between parties involved.They are initiated when individuals or companies agree to share confidential data among them.
Types of Non-Disclosure Agreements.
Precise details of each NDA are exceptional depending on the parties involved and matters discussed since they will refer to several specific information.
Generally, there are two types of NDAs: Mutual and Unilateral. Mutual NDA is usually implemented between two parties engaged in a partnership involving sharing confidential and sensitive information.
On the contrary, a unilateral non-disclosure agreement is a contract that provides one party with the responsibility of protecting the other party’s sensitive and confidential information. In a company, the employee usually commits not to reveal any personal information or skills gained.
Essential Components of Non-Disclosure Agreement.
Understanding what is entailed in NDA is essential for the effective implementation and observation of the stipulated details by the involved parties. Here are the vital elements each party should expect in a Non-Disclosure Agreement form –
Parties Involved in the Agreement
This is the first component where each party to the agreement is defined. It is a pretty straightforward process through which the names of the disclosing and recipient parties are outlined.
However, it is crucial to ensure that these parties are specified and mentioned whether their group companies or subsidiaries can be in on such information.
Defining Confidential Information
This element of a non-disclosure agreement seeks to specify which type of information should be considered confidential. Usually, the disclosing party creates this section as broad and detailed as possible.
The tricky part of this section is whether to agree that oral information can be considered confidential or the NDA is limited to written information only.
Scope of Confidential Information
This is the most salient element of the NDA since it outlines how the confidential document can be used. Usually, an NDA consists of two sections: one that defines the circumstances under which the confidential information can be used and one that stipulates when to be kept secret.
Therefore, this segment should be kept brief on the disclosing party’s side to avoid excessive usage of the information lest it gets leaked.
Exclusion from the Confidential Agreement
Every NDA needs to have a clause that excludes a party from confidentiality treatment. This section addresses circumstances under which the recipient would find it burdensome to keep the secret.
These scenarios may include information that is already in the public domain. For instance, the recipient got a leak from other sources or information developed by the recipient or other third party apart from the disclosing side.
Also, the recipient may be forced to disclose confidential information through a court order. So it means they are bound to be excluded from the confidentiality treatment by law.
Term of the Agreement.
This clause outlines the duration that the agreement should last. From the disclosing party’s point of view, the contract should last long as possible to keep the information safe for long.
However, the recipient would prefer a definite term since some information becomes repetitive after some time. It is difficult to ensure no one violates the agreement after they become redundant.
Generally, it should be two years, but it can take longer depending on the industry and the type of information to protect.
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