An NDA non-disclosure agreement is a legal contract that establishes a confidential relationship. The parties who sign such agreements agree that they will not disclose confidential information that has come to them. It is also referred to as a confidentiality agreement.
Such agreements are common to businesses that enter into negotiations with other businesses. They allow both parties to exchange confidential information without fear of the competitors finding out. Therefore, such agreements can be called a mutual non-disclosure agreement.
Businesses use the NDA agreement in a variety of situations. For example, when a company is about to be sold, any buyer can sign a non-disclosure agreement to protect any confidential information that the company may disclose during sales negotiations.
The most common situation where companies use non-disclosure agreements is when employees have access to confidential information, including trade secrets, customer information and lists, and marketing strategies.
Duration of the Non-Disclosure Agreement
A non-disclosure agreement can only cover one transaction, which lasts a few days. If a party wishes, it can last indefinitely. Often such agreements last longer than a specific transaction. This can be as long as the secret remains secret.
The average time period is between 1 and 5 years. But NDA agreement templates can specify their own length of time. The main thing is to know how to present it correctly in the agreement. It is important to remember that the time period should last as long as necessary to keep the information confidential.
What does a Non-Disclosure Agreement Involve?
This contract has two purposes – protection and confidentiality. The information in the agreement can vary. The contract is considered to be a legal part to protect a company’s ideas and data from being passed on to competitors. Breaching this agreement will result in a variety of legal consequences. This ranges from lawsuits to criminal charges. This is how a business gets its level of protection.
The NDA template has three functions:
- Protection of confidential information. Once such a contract is signed, the party legally undertakes to keep secret confidential information. Any leakage of data will result in a breach of the contract.
- Identification of the information that is being protected. A non-disclosure agreement identifies that particular information. This allows clients to work within the boundaries set out in the agreement.
- Patent protection. The agreement can protect the owner when developing a new product or concept.
A non-disclosure agreement pays particular attention to the confidentiality of information of individual organizations and individuals, which differs from other contracts.
Requirements for a Non-Disclosure Agreement
Non-disclosure agreements can be adapted to any situation. There are usually 5 main elements that are considered essential to any such agreement:
- parties to the agreement – in each such NDA sample, you need to specify who each party entails;
- definition of confidential information – you must specify what information is considered confidential;
- appropriate use of the information;
- exclusion of confidentiality – in some situations it is easier to define what is not confidential;
- time period and other clauses – specify who each party is responsible for.
You can also detail state law or laws that apply to the agreement.
There are three types of non-disclosure contract: reciprocal, non-reciprocal, and disclosure agreement. In reciprocal agreements, both parties undertake not to disclose information. Nonreciprocal agreements involve new employees of the company if they have access to confidential information. A disclosure agreement gives a party the right to share personal information and to prevent legal action for doing so. For example, a doctor and a patient may sign such an agreement – this is an NDA agreement between employee and employer.
Where is the Best Place to Create Documents and Agreements
The PandaDoc software can be used to create competent agreements and other documents. It offers many different tools so that the user can create contracts and electronically sign and send them. This software helps many organizations to have templates ready for the creation of documents at their fingertips. All that remains is to enter your details and the contract is ready. The popularity of this software is only increasing day by day. It has many useful features. Most importantly, all the data is securely stored in the cloud. This allows documents to be stored on the service, so you don’t have to waste time looking for them.