NDA, nondisclosure agreement, is used to protect the trade secret of a company. Trade secrets is the legal term used for the confidential information which is valuable for a business.
NDAs also help to formalize a relationship between two parties as the confidential one.
In other words, NDAs state that the companies are allowed to take the legal actions against the person who shares any private information which he or she has agreed not to. It doesn’t matter whether they are giving it to others, using it for his own, or being careless with the information that results in falling into the wrong hands. Companies can also specify the potential legal action terms like where it takes place and who is going to be responsible for paying the legal fees.
NDAs sometimes also known as the confidentiality agreements. It typically contains some elements, such as:
1. The definition of an information which is needed to be kept confidential. This may be tricky as the information is not being described, but some general description such as product designs or programming does the trick
2.The possible list of the things which are not considered as confidential. The law clarifies that the certain things can’t be kept private, and these type of areas must be get noted
3. The description of the duties and obligations of the person who is signing the NDA. this will list specifically those points what is expected
Moreover, the end date for that agreement and any other provisions which are required in the situation must be included too. Usually, employees and contractors use the NDA most. Companies expect that NDAs, in addition to the non-compete agreements, would prevent their staff from exposing their secrets and skills to the competitors.
Whereas, entrepreneurs or inventors request the NDA signatures from their potential advisors or investors for keeping their business ideas under wraps. Companies also request an NDA when they share their inner workings with buyers as well as other consultants.
Businesses which have security concerns may need an NDA from anyone who walks into their buildings. This practice is most common at the companies which rely on the tech secrets and have a lot of leverage.