INTRODUCTION
A Non-Disclosure Agreement (‘NDA’) is an Agreement in which the Parties agree not to disclose the ‘Confidential Information’ covered by the Agreement. An NDA is mainly signed between two parties that aspire to plan to work with each other in the future and hence want to protect the vital information that has been shared during the discussions. It’s also signed between the parties that have finally decided to work with each other and do not wish any information disseminated to the third party. Hence, it is signed between the companies, individuals, employer-employee which is called the NDA for employees, and other entities. NDA is also known as the Confidentiality Agreement, Secrecy Agreement, and Proprietary Information Agreement.
WHY IS NDA REQUIRED?
NDAs are required to protect information such as customer lists, proprietary information, business-sensitive sensitive information, and trade secrets. No business owner would want their trade secrets or customer lists to be disclosed to their competitors and no employer may require that his employee discloses personal information to any third party. To prevent such leaks of confidential information, one needs to protect their information with the NDA. It is not possible for the court to provide assistance with the disclosure of the confidential information if the party has not signed the NDA.
Especially for beginners, the NDA is vital in various contexts such as;
While presenting & sharing an invention or business idea to an investor, partner, or distributor;
For obtaining the services from another organization or businesses that may be able to access the sensitive data;
While providing employees access to the confidential and proprietary information of the businesses during the period of their employment;
While displaying products or services to a prospective client.
TYPES OF NDA
The NDA can be of 3 types:
Unilateral NDA- This includes 2 groups but only 1 group discloses certain information to the other and seeks to protect it from further dissemination.
Bilateral NDA- It is also known as a combined NDA. It involves both the parties, and both the parties disclose the information to each other, and seek to protect that information from further dissemination.
International NDA- It involves three or more parties entering into the Agreement, in which at least 1 party discloses information to other organizations and aims to protect the same form from further distribution. Instead of having 2 or 3 combined NDAs, one can have one Multilateral NDA.
IMPORTANT CLAUSES OF THE NDA
1. Definition of the ‘Confidential Information
The Description of the Confidential Information should be wide enough in order to cover all types of information under the heading. Physical & intangible information might be included under the heading. Only information that is already present in the public domain and only the information of the Recipient Group might be called confidential.
2. Term of the NDA Agreement
The principle of the Agreement ought to be described, and even after the termination of the Agreement, the survival of the privacy obligations can be made permanent in the form of certain information such as trade secrets that are essential to the business. Generally, the time has to be between 2-5 years.
3. Usage of the information
Certain parties restrict the disclosure of the information between the limited employees or departments of the other party. The phrase to look up is “Need to know” in this clause. Hence, this clause states that the information provided shall be used for the purpose stated in the respective Agreement only and the information should be disseminated to “Persons in need of knowledge”.
4. The Exceptions to Confidentiality Obligations
The NDA must incorporate certain exceptions to confidentiality. Such exceptions generally include information disclosed during legal proceedings or an investigation conducted by a judicial officer and information disclosed by a third party, who is not responsible for the confidentiality of the disclosing party.
5. Recovery of information
The receiving party is obliged to return the information and any further information and remove the same from its operating systems once the NDA policy has expired.
6. Remedies in case of Violation
Every NDA must have a clear clause stating that the aggrieved party will have the right to proceed legally in the prescribed manner in the event of a breach. Financial compensation is insufficient in such cases and therefore, the clause provisions relating to the victim's compensation and the right to seek retribution are quite common.
7. Arbitration & Mediation
The arbitration clause states that the parties would resolve their disputes by arbitration instead of entering the long & expensive courts.
8. Jurisdiction & Governing Laws
Different groups may be of different nationalities. And the laws of different countries are quite different. It is advisable to specify and select a set of rules that will have the authority and govern the Agreement. In accordance with a set of governing laws, the parties must select a city whose courts will be empowered to administer the disputes between the parties.
CONCLUSION
Each business has its own plans, business processes, policies, plans, information, trade secrets, and other sensitive information that it has developed through its hard work. And that is why it needs to be kept confidential and limited to the same distribution of any kind of the third party. A well-constructed NDA could help a business protect its sensitive information and only a good lawyer can help you draft an appropriate NDA. Therefore, it is advisable to hire the same lawyer instead of downloading drafts online.
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