Non-Disclosure Agreements (NDAs) are a contentious topic amongst investors, business professionals, inventors, and others. Most professionals are hesitant to talk about their ideas or creations unless they are provided with full confidentiality.
Why Non-Disclosure Agreements are Necessary
NDAs are written in an attempt to protect sensitive information. If you or your business must reveal confidential data to another person or group in the course of business, there is a chance that information could move on to other parties who might not keep it private. The NDA is created and signed by both parties to prevent the transmission of the information to inappropriate parties. Non-disclosure agreements are especially helpful in instances where a business is looking to hire an employee, freelancer, or consultant.
As an example, the negotiation of a purchase or sale with a business or individual might require an NDA. It also makes sense to have a non-disclosure agreement when presenting a new technology, product, or design to potential investors. If you wanted to show financial records to a prospective business partner, and you are worried he or she might be tempted to share that data, mandate an NDA be signed before the meeting. Additional examples of information that should be kept confidential with NDAs include:
? Accounting and financial records
? Personnel records
? Product designs
? Proprietary technology
? Marketing strategies.
Some non-disclosure agreements require negotiating, so do not assume the terms of this agreement are set in stone. You and your Clearwater attorney can help craft an NDA to serve your interests or make the agreement fair for both parties. If you do not feel comfortable negotiating the terms of your agreement, work with an attorney for assistance.
Define Confidential Information and the Obligations of Each Party
It is imperative that you specify exactly what you consider to be confidential data. Explain exactly how your group defines this term and what must be kept private. When creating a list of confidential information, consider the company’s trade secrets. Think about what sets your group apart from the rest. Anything competitors can use against you should be kept confidential through an NDA. This document should also explain exactly what each party is responsible for. Non-disclosure agreements in Clearwater should detail duties of confidentiality, such as the prohibition of sharing data with third-parties, and non-use that forbids using confidential knowledge for private gain.
Other Provisions to Include
Include non-solicitation and non-competition clauses especially where you end up doing business together. Non-disclosure agreements in Clearwater typically have these clauses to safeguard confidential data. A non-solicitation clause prevents the other party from recruiting your staff to work for them. A non-compete clause stops the recipient from forming a business that competes with yours.
The NDA Should Not be Overly Restrictive
With non-competition clauses, overly restrictive terms may render certain provisions unenforceable and the court may “blue-line” the agreement. This is where portions of your business agreement are held unenforceable or revised. First, remember you must have a legitimate business interest to protect. Second, the nature of the information and type of business must be considered. If you are preparing to share highly sensitive trade secrets and have customers nationwide, it’s understandable if the NDA is more restrictive. Specify the geographic region covered in terms of region, state, or even the nation to protect your interest properly. And keep in mind, an open-ended non-competition provision time-wise is not a good idea. Generally, look for an applicable time period of 2-5 years.
Contact Eko-Law today to learn more about how we can help with your non-disclosure agreement in Clearwater!