Many businesses use non-disclosure or confidentiality agreements (referred to collectively here as NDAs) because they are a reliable way to protect trade secrets, and other sensitive or proprietary knowledge and information from being made public, or from unauthorized use or disclosure.
A business may require its prospective and existing customers, vendors, suppliers and other partners, to enter into an NDA to protect its confidential information from disclosure to actual or potential competitors. Examples of confidential information include plans for a new product, functional specifications or schematics for that product, sales and marketing strategies, operations, and process details. If confidential information is disclosed or used by the recipient in violation of the NDA, the NDA gives the discloser legal recourse against the recipient.
Elements of a Non-Disclosure Agreement
Typically, there are five essential elements incorporated into an NDA. These are:
- Definition and description of the confidential information. An NDA should include a non-confidential description of the information being disclosed without revealing what that information is. An example of such a description is: "Confidential Information includes all financial data, software development, code, and marketing strategies regarding Discloser's product. Just stating "Discloser's Confidential Information" as the description is insufficient. Without more, the NDA may be unenforceable.
- Exclusions to confidentiality. Some information, like information that the recipient already knows, or which is in the public domain, will be excluded from protection under the NDA. The recipient will be under no obligation to protect such information.
- Obligations of confidentiality by the receiving party. As part of their confidentiality obligations, the recipient of Confidential Information will be prohibited from breaching the confidential relationship, inducing others to breach it, or persuading others to acquire the Confidential Information in violation of the NDA.
- Time period or duration. Although the discloser of Confidential Information understandably wants a long period of confidentiality, the recipient does not want the administrative responsibility of having the confidentiality period go on indefinitely. As such, periods of confidentiality are typically 2-5 years from disclosure of the Confidential Information.
- Consequences of a breach. The NDA should spell out the consequences of a party's breach of the NDA. These can include the damages or other compensation for the breach.
Contact Becker Law LLC for Help With an NDA
It’s important to have a strong and unambiguous NDA protecting your business and your company trade secrets. Without it, your business is vulnerable and at risk of serious consequences should there be a confidentiality breach.
Georgia business attorney Steve Becker understands business contracts and can provide legal guidance and advice as to how to best draft and implement your NDA to secure your business relationships.