When confidential information about your business lands in the wrong hands, it could spell doom or lead to massive losses. You may no longer have the competitive edge, as other parties could use that information to their advantage. This is where non-disclosure agreements (NDAs) come in.
An NDA protects sensitive data, such as your business trade secrets by establishing a confidential relationship with the parties bound by it. Since an NDA is enforceable in court, it provides you with legal recourse or relief should the other party breaches its terms.
However, like any other legal agreement, your NDA must be well crafted for it to serve its intended purpose of safeguarding confidential information related to your business.
Key elements of NDAs
A non-disclosure agreement does not have to be long and complicated. The key points to include are:
- The parties bound by the NDA
- A detailed definition or description of the confidential information
- Each party’s requirements and obligations in handling the confidential information
- The scope of the NDA (How long it is binding to the parties)
- The exclusions from confidential treatment
- Consequences of a breach, among other terms of your NDA
It is best if you use simple understandable language in such an agreement. Ambiguous or loosely worded clauses can bring up unnecessary issues along the way. Additionally, you should be aware of the necessary steps to safeguard your business in case of an NDA breach by a party bound by it.
Tailor your non-disclosure agreement to your business needs
If a third party, like a contractor, auditor, or investor, will have access to crucial business data, it is advisable to design your NDA accordingly rather than take chances with an ineffective template document. A custom-made NDA will ensure no loose ends and that your business trade secrets and other interests are protected.