Businesses often rely on non-disclosure agreements to protect sensitive information. These legal contracts establish a confidential relationship between parties to prevent the disclosure of certain information to outside parties. A well-crafted NDA can protect your company’s valuable proprietary information.
Understanding the key components your business should include in its non-disclosure agreements is necessary to make sure your company’s vital secrets remain secure.
Define the confidential information
A vital step in drafting an NDA involves clearly defining the confidential information. This can include trade secrets, business strategies, customer lists and other proprietary information. The NDA must specify what information the receiving party must keep confidential.
Identify the parties involved
An effective NDA should state who discloses the information and who receives it. Identifying the parties involved will ensure the obligations of the agreement apply to the right individuals or entities.
Specify obligations of the receiving party
The NDA should specify that the recipient must keep the confidential information secret and not use it for their own benefit. This part of the NDA makes it enforceable.
Include the duration of the agreement
The agreement must state the period during which the recipient must keep the information confidential. The duration of the agreement often depends on the nature of the information and the potential harm that disclosure might cause. It is often for a term of anywhere from six months to two years.
List remedies for breach
A comprehensive NDA must outline the consequences if someone breaches the agreement. These can include financial penalties, injunctions to prevent further breaches and potential legal action.
Note jurisdiction and dispute resolution
Finally, the NDA should include clauses about the jurisdiction that governs the agreement and how to handle any disputes. This can include arbitration or mediation clauses to prevent costly court disputes.
Non-disclosure agreements are a valuable tool to protect a business’s proprietary information. Including these key components in your company’s NDAs will help ensure the protection of your confidential business information.