An NDA (non-disclosure agreement) is a legal document signed by two parties memorializing a confidential relationship.
Either one party or both possess sensitive information, and that information must be kept private in an effort to engage in open discussions regarding a prospective business relationship.
The NDA should be tailored to align with a clear business objective, and works to stop competitors from obtaining your business’ information.
An NDA helps to discourage your employees from leaving the company and then sharing your confidential information with a competitor in return for a higher paying position or more equity.
It also reduces the chance of you losing money due to inadvertent leaks: If your employees sign an NDA, they cannot leak passwords or company and client information. This could be considered negligent or willful conduct, and subject them to liability. This protects your business from losing clients and revenue due to data leaks.
By signing it, an NDA is enforceable. It needs to be clearly articulated and signed by both parties otherwise the court can strike down an NDA for being overbroad or vague, exceeding reasonable time limits, being indefinite in scope or duration, or applying to information that is not confidential or publicly accessible. Once signed, if the NDA is violated, then litigation can commence, which may include requests for injunctions or damages from losses incurred as a result of the violation.
Today, businesses increasingly operate in a digital world, making non-disclosure agreements (NDAs) more important than ever in protecting valuable information. However, disputes can arise over NDAs. In such cases, it may be necessary to hire a business law attorney to resolve the dispute and protect the intellectual property and rights of the company.
Companies can also take steps to avoid NDA breaches (violations) in the first place, by ensuring their employees read and acknowledge understanding of the NDA they sign; in order to take proactive steps to keep confidential information secure; and clearly label the information as confidential. If there is an NDA breach, however, collecting sufficient evidence to identify the source of the leak, and possibly filing for damages, is the way to recover your financial costs of the breach.
