Whether large or small, any business can find itself needing to share sensitive information with an external party in order to get things done and achieve their goals. Whether working with a vendor on a one-time project, such as a marketing agency working on a branding strategy or new website, or working with a distributor that will become an essential, everyday component to a supply chain, companies must find ways to protect their trade secrets. A nondisclosure agreement, also called a confidentiality agreement, is commonly used for this purpose.
As explained by Forbes, there are several specific points that should be outlined in an NDA. One of these is not only the requirement to keep certain information confidential but also the requirement for the other party to not take actions that directly benefit them because of their knowledge of the information.
A good NDA must clearly call out the information to be kept confident, the manner in which it may be shared between the parties, who on both sides of the agreement are involved or covered, and how any potential disputes will be addressed or resolved. A nondisclosure agreement may be one-way or mutual if both parties end up needing to share sensitive information with each other so as to avoid the need for two one-way agreements.
If you would like to learn more about when a nondisclosure agreement makes the most sense and how to craft an agreement that provides the right level of protection while also supporting the business needs, please feel free to visit the contracts page of our business law website.