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7 Things They Know About Non Disclosure Agreements That You Don't
Friday, 24 May 2019

 Non disclosure agreements are contracts through which the parties agree not to disclose information covered by the agreement. Be informed on what you sign:

 Over 30% of American employees have to sign a Non-disclosure agreement. These agreements have become common practice in the business world. 

The purpose of Non-disclosure agreements is to protect business secrets. Unfortunately, NDAs can be restrictive and broad in definition.

This, in turn, can limit a business’s ability to enforce the terms of the contract. They may also restrict employees from achieving their creative potential.

In this article, we will take a look at what non-disclosure agreements s are and everything you should know to protect your interests.

Non Disclosure Agreements


An NDA is a legally binding contract between two or more parties. In essence, it is an agreement to keep certain information confidential.

The goal of NDAs is to prevent competitors from gaining information that could compromise a company’s competitive edge.

The following are some things you ought to be aware of.

1. Broad Definitions Are Not Effective

Protecting your ideas is crucial as disclosure to the wrong parties could end up ruining your business.

However, you should be careful of the things you include in your confidentiality agreement. Many people make the grave mistake of including everything in the agreement.

Doing so can invalidate your agreement in the eyes of the law. You should only include the information that must be confidential. A broad definition will weaken your case in a situation where the other party breaches the contract.

Ensure all information that should not be disclosed is clearly marked as confidential.

Any trade secrets should be clearly marked as such. Marking trade secrets gives you even more protection as they are regarded highly in the eyes of the law.

Additionally, trade secrets are considered to last indefinitely.

2. You Must Get All the Details Right

A contract can become invalid because of simple errors like getting the wrong name of the other party. Always double check the names and make sure they’re spelled correctly.

Companies may sometimes have a trading name that differs from their actual legal name. The legal name is the one on registration documents and recognized by the government.

When dealing with a company, ensure you get its structure correctly. Failure to include the word limited if it’s an LLC may have catastrophic implications on your business or investment.

When dealing with such institutions, you will be better of listing both names and its business address.

3. You Cannot Protect Information That Is Known by the Third Party or Which Is Publicly Available

The purpose of NDA’s is to ensure that information that is not available to other parties remains confidential.

In the event that this information becomes public information without any breach of contract by the other party, the information would then cease to be considered confidential.

For instance, you may subject your prospective partners to signing an NDA. However, if an employee leaks this information, you will have no ground to take legal action against the prospective partners.

You should always be careful when discussing sensitive information. Any disclosures you make before having the other party sign the agreement will compromise your confidentiality claim.

4. Non Disclosure Agreements Should Be Signed by a Person with Authority

An NDA will be invalid if the person who signs it does not have the authority to bind the receiving party.

This is more likely to occur when dealing with big companies. Only sign the agreement with a company representative who has the capacity to commit the company they work for.

For partnerships, it is important to know that all partners will have to agree before contractual commitments are made.

The board of directors of a company usually appoints officials to run the company.

These individuals have the power to sign contracts on behalf of the company. Before any agreement is signed, request a copy of the certificate of incumbency or registrar of directors.

This will help you know which company officials can make contractual commitments on behalf of the company.

Alternatively, you can request an email or written confirmation that the party you are dealing with has the authority to enter into such an agreement with you.

5. You Have No Rights If the Receiving Party Has a Similar Innovation

It is only on rare occasions that you may choose to work with someone in a completely unrelated field. If you are in the technology space, you will most likely choose to work with someone in the industry.

As such, there is a possibility that the other party had also made similar discoveries before engaging with you. In such an instance, you cannot claim proprietary rights on that innovation.

As a result, the other party cannot be bound to a confidentiality agreement.

6. Jurisdiction

Confidentiality agreements are treated differently in different countries and states. The contract should clearly indicate the jurisdiction it will apply. You should also consider how enforceable the agreement will be in that jurisdiction.

It may be difficult to enforce such an agreement when working with someone in another country. However, if you have to work with someone abroad, include their country in the contract.

7. Failure to Limit Access to Protected Information Can Put You in Trouble

If you subject a third-party to signing an NDA then fail to protect the data yourself, the agreement will become invalid.

This may be due to careless exposure of the confidential data. It may also result from giving access to employees who do not have the authorization to access it.
 
Any confidential information should never be exposed to parties who do not have the authority or those yet to sign an NDA.

You should ensure that protective measures are put in place to prevent unauthorized access. This includes limiting access to the data and restricting duplication of documents and transfer of data.

Do It Right

Do you have an idea that might be the next big thing? Protecting your intellectual property is of paramount importance. Beware of the little details when signing any contracts.

Mistakes on non disclosure agreements can see you lose big time.
 
Perhaps you are looking to scale your business. Check out this article to learn some secrets from self-made millionaires.
 
 
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