A non-disclosure agreement (NDA) is a legally binding contract that establishes a confidential relationship.
This contract is a legal agreement between at least two parties in which both parties agree to share with each other confidential information, knowledge, and any confidential, proprietary, or trade secret information they desire for specific purposes, but that information is not available.
Drafting a detailed NDA while also ensuring excellent execution, is a very sensitive legal art that necessitates consultation with an expert lawyer. In this regard, Karimi & Associates Law Firm, with a team of experienced and expert lawyers in various legal fields, by providing specialized legal advice, accompanies and supports your interests in this process.
An NDA is a contract used by individuals and businesses to protect their valuable information in the context of their collaboration. It is a contract under which the parties agree not to release the information they have agreed to in the contract. Non-disclosure can be a stand-alone agreement, condition, or clause in the main agreement.
You may want to know more about the NDA for many reasons. For example:
You may have an idea and want to share it personally or with a start-up, but hesitate to divulge the idea due to the potential for abuse.
Or you want to hire a new person in your business with no previous knowledge.
Or if your partner asks you to enter into a confidentiality agreement with them.
Fortunately or unfortunately, the important feature of knowledge and information is that they can be easily and effortlessly spread and distributed among many people. One of the concerns of startups and people who work in the field of e-commerce is the issue of maintaining trade secrets and concluding an information confidentiality agreement or non-disclosure agreement. As a result, it is very important to be aware of the provisions that should be included in this contract.
Firstly, it should be clear who is involved in the contract. If the company is part of the contract, do the employees have access to that information as well or not? Are the company’s consultants and lawyers also covered by that contract?
Secondly, all the information, documents, and other items transferred to the other party in any way should be included in the circle of confidential information, and the other party should be committed to keeping them.
Furthermore, it should be mentioned that if the obligor (contracting party) becomes aware of any information disclosed, it must notify the other party.
The next point is about the contract termination. Upon the contract termination (for any reason), the obligor must return the information and documents provided to them to the contracting party and destroy them if he/she made a copy of them.
Certain obligations must continue even after the end of the main relationship. In such cases, it should be specified that these obligations will not be terminated, regardless of whether the principle of the contract is maintained or terminated. Consequently, an agreement may be terminated, but some of its obligations may remain, such as the obligation to maintain confidentiality.
The contract should state which information is considered confidential. Is all information or data shared between the parties confidential? This information should be defined in some way to prevent future conflicts. It is also necessary to mention cases that are exempt from confidentiality. This kind of information is available to everybody.
Another noticeable issue is the time. The duration of the confidentiality agreement should be clearly defined.
The last, but not least, is about the compensation. It is difficult to calculate the damage caused by the breach of the confidentiality agreement; therefore, it is suggested to set an accurate amount of the obligation in the contract from the beginning.
The undertaking of confidentiality is often not absolutely stated. In some cases, the recipient of the information may be in a position to release the information.
- The party committed to keeping secrets and information must prove that the information was in the possession of the recipient before the disclosure.
- It appears that the information was made available to the public without negligence on the part of the parties to the confidentiality agreement.
- Clearly, a third party obtained this information lawfully and was under no obligation to keep the information confidential.
Types of NDA
This agreement is also known as unilateral agreement. It applies to the new employees and it is an agreement in which one party, typically somebody who works, agrees not to disclose confidential information learned on the job.
It is quite simple; in a mutual NDA, both sides agree not to disclose the confidential information of the other party.
Making a decision between these two types of NDAs is critical because what happens next is determined by several variables, including negotiation leverage and whether one or both parties agree to the non-disclosure of confidential information.
The receiving party is the party that gets the confidential information, and the disclosing party is the party that discloses the information.
Advantages and Disadvantages of an NDA
The biggest benefit of an NDA is that sensitive information about the businesses is kept private. Signing an NDA prevents confidential information from becoming public.
NDA arrangements are also explicit. They specify what can and cannot be disclosed. Furthermore, NDAs are an excellent method to keep comfort and trust in a relationship. They also specify the consequences of disclosing restricted information, which should help to avoid breaches.
Some people believe that NDAs begin a relationship on the basis of mistrust. Employee NDAs can also deter top-tier talent from joining your company because they know they’ll be restricted from discussing their work in the future.
Moreover, forcing current employees to sign NDAs when working on special projects may negatively impact their experience with the business because they will feel less trusted.
Violating an NDA and the consequence
The following are the most prevalent claims in NDA lawsuits:
- Breach of contract (for example, breach of NDA)
- Breach of trust duties
- Abuse of trade secrets
- Copyright infringement or other violations of intellectual property legislation
The violation penalties are different case by case. Seeking an injunction to prevent the employee from further violating the NDA and also filing a lawsuit for financial damages for all losses related to the breach of the confidentiality obligations are the most common legal actions.
NDAs are usually signed at the start of any business or partnership with various people, or when hiring new employees. These contracts are crucial and are more than just a piece of paper to accept. It is critical to understand how it is in charge and to adhere to its provisions.
To conclude a perfect None-Disclosure Agreement, contact Karimi & Associates Law Firm through our contact us section and receive specialized legal advice in this field from our team of expert lawyers.