A non-disclosure agreement (NDA), also known as a confidentiality agreement, is a legal document.
Establishing a confidential relationship between two parties, it outlines terms and conditions for protecting sensitive information, trade secrets, or confidential data shared between the two parties.
There are two common types of non-disclosure agreements.
A unilateral ("one-way") NDA is when only one party discloses confidential information. A bilateral ("mutual") NDA is used when both parties exchange sensitive data. Determining the type of NDA you need will depend on the flow of information.
A non-disclosure agreement is crucial in situations where the disclosure of confidential information could pose a risk to your business or compromise your intellectual property—such as a joint venture.
The purpose of this agreement is to create a confidential relationship between the parties to protect any proprietary information disclosed between them and prevent sharing information with others.
By using an NDA, you can establish trust, maintain control over sensitive data and private information, and ensure that the recipient understands their legal obligations to maintain the confidentiality of such information.
Whether you're sharing trade secrets, client or customer lists, financial information, business information, technical know-how, or other proprietary information, a well-drafted NDA provides the necessary framework to help protect your valuable assets and maintain a competitive edge in today's business relationship landscape.
By signing the NDA, the parties agree to be bound by the terms of this agreement.
A non-disclosure agreement should clearly identify the disclosing party and the receiving party, including any additional parties involved in the agreement, such as affiliates, partners, or agents.
In this section, the parties agree to a non-disclosure agreement that assigns each party a set of obligations regarding the important subject matter being shared.
It should also set out if this is limited to written communication or extends to oral exchanges as well.
It’s important to clarify any information exempt from the NDA, such as publicly available data or previously known information.
Other common exclusions from the definition of "confidential information" include information independently developed by the recipient or information rightfully received from a third party not under a confidentiality obligation.
As part of the provision of this agreement, this determines the effective date and length of time the NDA will remain in effect, ensuring compliance with local state laws.
Consider specific provisions for trade secrets in Texas or other states, or the enforceability of NDAs in California and other states.
The employee solicitation must address whether the recipient is prohibited from soliciting or hiring your employees. It should also establish time limitations for such activities.
This section defines the jurisdiction and process for resolving disputes related to the NDA, providing clarity on how conflicts will be handled.
A non-disclosure agreement should outline the preferred methods for sending official notices to the other party. This can include options like personal delivery, USPS first-class mail, certified mail, or return receipt requested.
Finally, the NDA should discuss the possibility of seeking an injunction. This is a legal action that can prevent the other party from breaching the agreement.
You shouldn’t sign a non-disclosure agreement if:
It’s generally not advisable to break an NDA unless there are extenuating circumstances. Those could be the other party's breach of this agreement, a legal obligation, or protecting public safety or welfare.
However, it’s crucial you consult with legal counsel to fully understand the implications and potential consequences before taking any action.
Yes, if one party breaches the agreement, the other party can seek legal remedies.
Yes, an NDA can have amendments or be terminated by a mutual agreement between both parties. Any changes should be documented in writing.
Some NDAs include "survival clauses," which means that certain obligations continue even after the termination of the agreement.
The duration of an NDA can differ and is typically specified within the agreement. It can range from a few years to an indefinite period, depending on the circumstances.
No, NDAs aren’t limited to businesses. Individuals, freelancers, and professionals can also benefit from using NDAs to protect their confidential information.
For example, an NDA might be used by authors working with ghostwriters, or by inventors discussing a new idea with potential partners.
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