A non-disclosure agreement is basically a agreement or contract between parties where the parties promise and agree that they will not share the confidential information that they are communication with one another either in a employment setting or business transaction. Basically, these agreements prohibits the parties from disclosing information without the other’s consent. In an employment setting, this may be included as a clause in the overall employment contract, or they can be created for separate projects as needed. A non-disclosure agreement is also the best way to protect trade-secrets of a business or company when the company does not want this type of information to reach the public. By using a non-disclosure agreement, the company or business can ensure that these secrets stay a secret.
Non-disclosure agreements are usually formed by the employer, and typically ask the employee not to disclose private company information. However, they can sometimes flow in the other direction. For instance, an employee may ask their employer to sign a non-disclosure agreement if the company will be using the employee’s own personal work or data for their projects.
Non-disclosure agreements are sometimes called confidentiality agreements.
What is Covered Under a Non-Disclosure Agreement?
Non-disclosure agreements often include information and instructions such as:
- The names of the parties affected by the agreement.
- Identification of the information, subject matter, product, or ideas that should not be disclosed (may include formulas, recipes, construction blueprints, and other material).
- Whether the information can be disclosed at all to those outside of the agreement.
- If the information can be disclosed, procedures for disclosing the information.
- Penalties or consequences of unauthorized disclosures.
Lastly, some non-disclosure agreements may expire on a given date, or after the project at hand is completed. It is usually best to indicate the time period in which the disclosure agreement is valid.
How Long Does a Non-Disclosure Agreement Last?
The time period for a non-disclosure agreement is always addressed in the agreement itself. It usually requires the receiving party to keep the information shared confidential for a certain number of years. Some NDAs are negotiated to last 3-5 years. Under common American non-disclosure agreements, the standard time period is set at 5 years.
When is a Non-Disclosure Agreement Useful?
A non-disclosure agreement is useful when you are trying to communicate sensitive or confidential information with another person or company and you want that information to be protected and not shared after the conversation or communication. Many companies use non-disclosure agreements when doing business transaction communications when they want protected trade secrets or confidential information to be kept private. NDAs are the best way to confirm that confidential information stays protected.
What Are the Basic Elements of a Non-Disclosure Agreement?
Most non-disclosure agreements cover the following five basic elements:
- the definition of confidential information
- what information is to be protected under the agreement
- obligations of the receiving party
- what information is excluded and not considered confidential information
- time period of the agreement
- miscellaneous provisions (state law, attorney fees, arbitration options)
What Happens if the Agreement is Violated?
Violations of non-disclosure agreement can result in various consequences, including:
- Monetary damages for losses cause by the unauthorized disclosure.
- Termination of the employee from their work position.
- Return or retrieval of the information, product, or plans that were disclosed.
In addition, a violation of a non-disclosure agreement can sometimes involve other areas of law, especially copyright, trademark, and patent laws. Thus, an intellectual property violation can often be connected with a non-disclosure agreement breach.
Do I Need a Lawyer for Help with a Non-Disclosure Agreement?
Non-disclosure agreements should be entered into carefully, and should be reviewed before signing them. You may wish to hire a business lawyer if you need help drafting, editing, reviewing, or disputing a non-disclosure agreement. Your attorney can inform you of your legal rights and can assist you in court if you need legal representation.