How to Create an Effective Non-Disclosure Agreement in North Carolina
A confidentiality agreement is the one document used by companies which have secrets to keep. In other settings, companies use the confidential agreement (CA), also called a non-disclosure agreement (NDA) to prevent any spills of secrets.
The truth is, once your proprietary information has been revealed to the world or a few employees who have not signed an NDA, you will most likely lose a large percentage of your projected revenue were the trade secrets kept under wraps. For this reason, most companies will ensure that new employees, particularly the ones who will need the specifics of the trade secret to work sign an NDA before they start working and before they learn about all their roles and responsibilities in details.
In an NDA or confidentiality agreement in North Carolina, trade secrets refer to information, often techniques, methods, formula, device, process, program, or compilation which gives a company its competitiveness just by remaining a secret. That means that if the information falls into the wrong hands because of a breach of contract, the company loses its competitiveness and revenue.
Taking all that into consideration, it means you will only protect your trade secrets and other forms of proprietary information by creating an airtight NDA, one that will forestall a possible breach. So, other than asking an employee, investor or a contractor to keep the information disclosed in confidence a secret, you should ask them to sign a document to reinforce their confidence. Written documents will be remembered than spoken words, and people who sign documents and promise to maintain secrecy are more likely to keep their word if they sign a document.
So, how do you ensure that the NDA created is effective?
First, download a professionally build free North Carolina non-disclosure form online then fill it out. As the initiator or creator of the NDA, or owner of the secret, you are the disclosing party and the person who signs the document, promising to maintain the secrecy of the information is the receiving party.
Below are the guidelines to follow when creating an NDA
Outline the definition of confidential for your business: different people and companies have varied definitions of confidential information. You need to ensure that the receiving party doesn't find and use any loopholes in your free non-disclosure agreement in North Carolina. So, spell out the definition of secret information and be as specific about the definition as possible.
Outline the details of the trade secrets and proprietary information to ensure that the receiving party gets it right from the word go. Note the customer lists, marketing strategies, personnel records, financial records, product designs, proprietary technology, and vendor lists constitute trade secrets.
Outline the obligations of the receiving party: the receiving party is expected to keep as a secret the details of the NDA at all time. He or she should restrict the access of the information by third parties (third parties who require access to the information must sign a third-party form of NDA), and they should also not use the trade secrets for their own benefits.
The receiving party is also required to return all materials of the trade secret to the disclosing party after a specific time or upon receipt of a written notice by the disclosing party. On top of that, the receiving party is obligated to reveal the trade secret or proprietary information when compelled by the government or the court. They should, however, notify the disclosing party about the compulsion order as soon as they receive the order.
Outline the details of the penalty resulting from a breach of contract: Besides indicating that an employee cannot disclose a trade secret to your competitors, the media or the public, the NDA must highlight the consequences of a breach. Often, the disclosing party gets to seek an injunction relief (the guilty party is asked to stop revealing the secret) and/ or monetary damages for the loss of profit and losses suffered. What this means is that you have to indicate the value of the trade secret not just to emphasize the value of the secret but also to avoid under-compensation.
Incorporate a non-compete clause: Since you do not want an employee to solicit your clients or work with/ for a direct competitor soon after leaving employment at your company, you might want to include a non-compete clause. A non-compete is one of the most restrictive agreements employees have to sign, and the court takes them seriously.
The terms of the non-compete, though restrictive, should be reasonable in terms of the time the restriction stays the action and where it applies. The court looks at the time and geographical scope of the non-compete to ensure that it does not make the life of the ex-employee a living hell.
The activities or roles played by the ex-employee in your company is also considered - if an employee worked at a position that didn't interact with the trade secret, a non-compete would be unreasonable.
Also, when preparing a non-compete clause, you must consider the consideration - what the employee gets from signing this restrictive agreement. The courts consider initial employment offer sufficient consideration.
Keep it short: Even though the life of your company depends on the specificity of the NDA, you must keep it as short as possible. If your NDA is long, the receiving party may be motivated to seek legal counsel, and that will automatically delay the process.
Keep it simple: To make signing easy, make use of technology to create a digital NDA. This ensures that the parties involved sign the document fast and even when they are miles apart.
Finally, ensure that the right people have the NDA. First in line are employees because you do not want a disgruntled employee soliciting your customers to a competitor.
Are you looking for an NDA in Charlotte, Wilmington, Asheville, Raleigh, Greensboro, Boone, Cary, Chapel Hill, Concord, or any other city in North Carolina? Get started with our free non-disclosure agreement in North Carolina.