A Non-Disclosure Agreement (NDA) is one of the most popular and versatile documents that a business will use. An NDA can be used in a number of business situations, including licensing a product, discussing a partnership, hiring an employee or even sharing information with a potential buyer or investor.
In this article we discuss the 5 key things you’ll need to know to create and execute a Non-Disclosure Agreement.
1. What is a non disclosure agreement?
A non disclosure agreement (NDA) is used to safeguard a business’s confidential information. This document is used when one or both parties in a relationship wish to disclose confidential information. It ensures that the person or organisation who has access, does not disclose it to any third party without the consent of the business. Non disclosure agreements can also specify the terms under which the business shares information.
2. Unilateral vs. Mutual NDA’s
There are two types of NDAs; one way and mutual. The one way NDA is the more common one. In a one way NDA, the business discloses the information to another party and the party that receives the information agrees not to disclose the information. In a mutual NDA, the parties agree not to share the other’s information. This type of non disclosure agreement is generally used when two businesses share confidential information.
3. NDA’s are only effective if signed
An NDA is an important weapon in deterring people from disclosing confidential information. However, an NDA is no use against a business or individual that has not signed up to its terms. Before you disclose any information think about who will have access to confidential information, make a list of all the people and make sure that NDA’s are signed by everyone.
4. Sign an NDA before you share confidential information
It is important that you get your NDA in writing and signed by both parties before any confidential information is shared. This way, both parties know their duties and privileges. Information shared before the NDA is signed may not be captured under the agreement.
5. Don’t only rely on an NDA to protect your information
You should take additional steps to protect your confidential information. This may involve operating on a need to know basis or setting up information security policies. Physical protection of information should not be ignored, locking doors and filing cabinets goes a long way in protecting your confidential information.
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