Nondisclosure Agreements

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Tips & Advice to help you make your decision on Nondisclosure Agreements

The idea of keeping a secret isn't anything. People expect friends and other loved ones to keep their confidences all the time. People expect the same thing in business as well. The biggest exception is that in business, one or more parties can insist on nondisclosure agreements to ensure that the confidential information stays private. These agreements are quite common in the business world and are agreed upon by two or more parties with some kind of professional stake in keeping information between the parties discreet. The specific information to be confidential will be laid out in clear terms within the agreement to avoid any possible misunderstandings.

There are many occasions when nondisclosure agreements can be beneficial. Some companies insist that their employees sign and adhere to these kinds of agreements all the time. It is not uncommon for employees that work with sensitive information and research be held accountable by these legal documents. Partnered businesses often use them as well. They typically state that neither company is allowed to reveal the exact details pertaining to the project to be collaborated on. While there are do it yourself options, for security, most people choose to have a qualified attorney draw up the agreement.

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Nondisclosure Agreements

When it comes to protecting proprietary information, "Don't ask, don't tell" simply doesn't fly. That's where a nondisclosure agreement (NDA), or confidentiality agreement, comes in. Whether your company needs one depends on a variety of factors, including the nature of your products and business relationships.

Nondisclosure agreements can exist between various individuals and entities you do business with, including:

Temporary or permanent employees
Independent consultants or contractors
Potential investors
Prospective customers who might need access to proprietary information before making a purchase decision

Find out if you need a nondisclosure agreement

Whether you need one depends upon the complexity of the relationships between you and other parties involved. It also depends upon the nature of the information you're seeking to protect, such as an invention, proprietary technology or financial information.
Try: The American Bar Association has a listing of state bar associations — contact them to see if your state recognizes NDAs, which are contracts governed by state law. Search the Yahoo! directory of trade associations to learn how others in your industry handle NDAs.

State terms clearly

One key issue to resolve early on is whether the NDA is one-sided or mutual (if information will be shared by both parties). The information to remain confidential should be clearly spelled out, as well as any obligations on the part of any party, and the time period of the agreement.
Try: Legal portal NOLO.com is a good resource for learning about what comprises a good NDA. Sample NDAs are available to study at the SCORE Web site and at AllBusiness.com.

Hire an attorney

Unless you're a contracts and liability expert, it's a good idea to seek legal assistance. If you do feel sufficiently capable, basic NDA forms are available for download at legal sites.
Try: FindLaw.com and NOLO.com allow visitors to search for attorneys. NOLO.com also offers basic NDA forms for sale.

Many major corporations, including Microsoft, have made their nondisclosure agreement forms available to the public for reference.
Consider putting nondisclosure language in employee handbooks to emphasize their importance. It may not carry equal legal weight as a formal contract, but it will emphasize the need for trust among employees.
If you leak key info at a meeting without an NDA, it's considered public disclosure.
Consult an attorney to find out if you need to apply for patent protection in addition to drafting an NDA.