What You Need To Know About Non-Disclosure Agreements- Enterslice

What is Non Disclosure Agreement?​

​A Non-Disclosure Agreement (NDA) is a legally enforceable contract that establishes confidentiality between two parties—the owner of protected information and the recipient of that information. By signing an NDA, participants agree to protect confidential information shared with them by the other party. In addition to not divulging or releasing the information without consent, the recipient also agrees not to copy, modify, or make use of the information in any way that is not authorised by the owner.

A signed NDA form can help you avoid a lot of problems as a business owner. Without a confidentiality agreement in place, your trade secrets and sensitive information can be disclosed publicly or otherwise used by employees, vendors, clients, or anyone else that you share them with. A Non-Disclosure Agreement lets the recipients of your proprietary information know that you expect confidentiality and it authorises you to take legal action if the contract is violated.
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Other names for a Non-Disclosure Agreement include: NDA, Non-Disclosure Form, Confidentiality Agreement, Confidentiality Statement, Confidential Disclosure Agreement (CDA), Proprietary Information Agreement (PIA), or Secrecy Agreement.

​NON DISCLOSURE AGREEMENT

​A non-disclosure agreement full form (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA) or secrecy agreement (SA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information

​Why Non-Disclosure Agreement is required?

​Whether you are considering a new business relationship or you have already entered one, it's often smart to make a Non-Disclosure Agreement. Employees, business partners, and vendors are often privy to sensitive information that should be protected from disclosure to the outside world. Without a signed confidentiality contract, your business data and trade secrets could become public knowledge without your consent.

Types of Non-Disclosure Agreements

NDA are of three types:- 

• Unilateral NDA: It involves two parties, out of which only one party discloses certain information to the other and expects that the information is prevented from any further disclosure.
  
• Bilateral NDA: It involves two parties; both the parties disclose information to each other, and both of them intend to protect the information from disclosing to another. E.g.- Joint Venture.
  
• Multilateral NDA: It involves three or more parties to the agreement, out of which one of the parties discloses the information to other parties and wishes to have that information protected from any further disclosures. These types of NDAs also eliminate the need for distinct unilateral or bilateral NDA.

​When to sign a Non-Disclosure Agreement?

• Non-Disclosure Agreement while entering into a business deal: While entering into a business deal, like hiring a vendor or supplier or consultant, if you want to ensure that the proprietary information you are sharing with those vendors or service providers, does not become public, then entering into an NDA is a great idea. For example, if you are going to work with a logo designer, and have to tell that person the concept of your to be launched business, and you don’t want him or her to go and discuss this with your competitors or other business owners, then entering into an NDA will be very useful. In startups and some information sensitive companies, it is a brilliant idea to make employees sign NDAs. In fact usually, their employment agreement itself carries an NDA clause which serves the same purpose. Also, there are many other applications. For example, if you are looking for a potential buyer for your company, before disclosing proprietary information, you may enter into NDAs. Dominos and other such businesses that depend on franchising often make it mandatory for the franchise to sign an NDA that they won’t disclose details like menu or how proprietary food is to be made or details of profit or loss.
• Non-Disclosure Agreement while starting a new project: On starting a new project and the need to collaborate with a few people, even when commercials are not explicit, or company or partnership isn’t framed, and there is no IP to protect yet, it may pay off to enter into an NDA.
• Should you sign NDA while talking to investors? Many people used to do this in the past. However, it is an unnecessary practice and is becoming obsolete now. Most investors will refuse to sign such an NDA for early discussions. Only if and when the need arises to look inside the papers like revenue numbers or a particular technology or some sensitive data at an advanced stage of considering the company for investment, a request to sign an NDA first may be made. Justification may be made as to why signing an NDA is important. Same goes with Mergers and Acquisitions. However, there getting an NDA signed might be easier.
• Non-Disclosure Agreement clauses in contracts: It is a practice that an NDA clause is inserted into all and sundry contracts as a part of special precaution. Unless a part demands its removal, it generally stays. It helps both parties on the whole, as business details have to be treated with caution and can’t be leaked to media, etc., without a doubt even when conflict arises in the course of doing business.
• NDA to protect trade secrets: We often advocate signing a trade secret non-disclosure agreement when trade secret requires protection. It is not yet a practice in India but a very useful step. Top executives and employees should be made to sign such agreements. It goes a long way in preventing them from jumping into business with the same information and competing with the former employer.

Benefits of entering into an Non-Disclosure Agreement

​As discussed above NDA is an agreement between two or more parties whereby they agree to disclose confidential information among themselves but excludes all other from the right of accessing that information, except in some circumstances.
Five Advantages of signing an Non-Disclosure Agreement: 

• NDA helps the parties to accommodate or to adapt their obligations well. It helps them to understand when the obligations do not apply and when they would terminate.
• It helps to describe exactly what, the confidential matter is and helps in maintaining their secrecy.
• Non-Disclosure Agreement deals with the provisions which deal with penalties imposed on the contracting party who discloses the information which was supposed to be kept confidential. The one who breaches with the NDA are prescribed punishments in the form of compensation. They have to bear the damages caused. This issue can also be brought to the court where they can receive an injunctive relief. This would prohibit the recipient from disclosing such information any further so as to prevent breach of non-disclosure
• Non-Disclosure Agreement helps in achieving the purpose of their commitments by performing due diligence in safeguarding the confidential information.
• A court cannot give relief for the breach of confidential trade secret or information if the owner of that information has not entered upon Non-Disclosing Agreement. NDA is like a protection given to the owners. A court grants relief to the owner if he has taken attempt for safeguarding the confidential information.​

Enterslice can help you make an Non Disclosure Agreement, all you have to do is follow simple steps: