In many business to business transactions, before information can be exchanged, both parties sign a non-disclosure agreement or NDA. A well-drafted NDA helps assure both parties that the confidentiality of the information they’re about to share will be maintained by the other party. NDAs can be one directional, meaning one party shares and the other agrees to receive and keep secret, or mutual, meaning that both parties share and agree to keep secret.
An NDA is a contract between two or more parties to keep the information shared as part of a transaction secret. This may include trade secrets, designs, client lists, strategies, financial information, and more. As part of the agreement, one of both parties agrees to protect the secret information and, in the event they fail to do so, allows the injured party to sue for injunctive relief (to stop the problematic flow of information) and to recover any monetary damages this sharing of information may have caused.
While NDAs can be a useful tool in many situations, in others, they are unnecessary overhead. If the information you’re sharing isn’t really that secret, the agreement may be for no purpose other than show. One common example of this is people looking to raise a seed round of investment to prove their ideas. Often the initial presentation and pitch does not require an NDA because it’s the implementation of an idea that’s unique and valuable. Having a potential investor sign an NDA can be off-putting. You’ll have to go with your gut or get some good advice in these situations. What you’re disclosing can also be protected by patent or copyright, making an NDA unnecessary. This is a good situation to reach out to a business attorney for advice. They can help you decide how much protection your idea needs and the best way to secure it.
You may also enter into non-disclosure agreements with employees and contractors. These people will know one or more aspects of your business very well, but may eventually go work for someone else. You want to make sure they don’t reveal your secret sauce and give another business a competitive advantage. This can give you peace of mind when hiring professionals for their services. You can even specify in your non-disclosure agreement that it covers the fact of your working relationship so someone can’t even share that they’re working for you.
Talk to an experienced business lawyer at Virtus Law Firm to get insight on the best way to protect your business information and still get work done and transactions completed. They will assess a number of factors about your business and explain you the best options for you. For more information or to schedule a consultation, call 612.888.1000 or email us at info@virtuslaw.com. We have the expertise to help business owners protect and grow their business at every step of the way.