A non-disclosure agreement is absolutely vital when sharing confidential or sensitive information about your company, such as trade secrets or customer data. In this post, we’ll show you how to write an NDA contract, when businesses use them, and how to enforce them.
What is an NDA?
Non-disclosure agreements are legally binding contracts or clauses in a bigger contract that prohibit the signer from sharing sensitive information. If the other side leaks anything, you could pursue legal action. There are three main NDA types, including:
- Unilateral, where one side divulges the information, and the other keeps it secret.
- Mutual, where both sides agree to keep the discussed information confidential.
- Multilateral, where three or more signers agree to maintain strict confidentiality.
The NDA you choose depends on your situation, your business, and why you need one.
Why businesses use NDAs
Businesses use these documents in many situations, usually to keep secrets away from a major competitor or guarantee employees don’t misuse client or customer data. With this in mind, here are seven situations where your company could set up an NDA:
- Product pitches: Some firms and entrepreneurs use an NDA when pitching a product to potential investors, ideally preventing the other side from stealing their idea.
- Hiring freelancers: It’s best to set up an NDA if hiring contractors from outside the firm; they might be working with sensitive business or customer data.
- Discussing mergers: Company mergers often involve both sides exchanging sensitive financial or internal data. A mutual NDA protects each party from malicious leaks.
- Onboarding staff: New staff in key roles often work with proprietary data. Always make sure these new hires sign an NDA as part of their work contract.
- Early previews: Film studios often set up test screenings to get the audience’s feedback and make changes before release; NDAs prevent attendees from spoiling anything.
- Licensing IP: NDAs also help when letting others use your software or trademarks; they ensure that your licensees don’t leak any sensitive details about it.
- Other negotiations: Nearly any business negotiation involves sensitive data unsuitable for the public eye. An NDA gives you peace of mind during these discussions.
How to get an NDA
Getting a non-disclosure agreement via more formal channels (such as consulting with lawyers) takes time and money. However, you might have a meeting tomorrow that requires one of these agreements. Only a document template site can help you here.
These sites offer customisable non-disclosure forms, letting you specify your situation and even adding extra clauses. You can also create separate contracts and add an NDA clause. These sites allow you to build and download a complete agreement in minutes.
With a reputable document site, you’ll always get an NDA template that holds up in court.
What your NDA needs
A non-disclosure agreement only works if it fits every legal requirement. While a template site is sure to cover every necessary base, it still helps to check it’s up to scratch. Here are the main points any NDA should include, even before you customise it:
- The relevant parties, including their legal names and roles
- A clear definition and explanation of the confidential information
- The measures the other party must take to maintain confidentiality
- Exceptions to confidentiality, such as publicly known information
- The agreement’s duration (either indefinite or a fixed term)
- Penalties, such as financial damages, for breaching the NDA
- An acknowledgement of UK data protection laws, such as GDPR
- For international contracts, specify which country’s laws you’ll use
- A request for the other party to turn over all confidential materials
You don’t need to go into detail about the confidential information here. After all, you’ll likely both be signing this before any significant disclosure. You can stay vague and refer to business plans or trade secrets; it might help to mention the broad topics they’ll relate to.
Enforcing your NDA
The information you shared might suddenly appear online. Your competitors may seem to know your every move; they could even launch products strikingly similar to yours. Collect evidence of this and be ready to take action, though this doesn’t always have to be a court case.
A cease and desist letter solves many minor breaches. It formally asks the signer to refrain from sharing confidential information and promises legal action if they don’t comply. You could also escalate the matter to a third-party mediator or arbitrator.
However, if their disclosure violates GDPR or harms the business, you can sue for damages. As this takes time, it’s best to secure an injunction immediately. This forbids the signer from causing any further problems before the lawsuit’s court date.
Final thoughts
You can’t share your company’s sensitive information or data without an NDA — if you try, your whole business could be at risk. Make sure you get the right template for your situation and always be ready to enforce the agreement if there’s a breach.
This content is published as part of our partnership with LawDistrict.
