What to Include in a Non-Disclosure Agreement

Did you know that over one-third of the U.S. workforce is bound by a non-disclosure agreement (NDA)? While NDAs are important in all industries, they are especially important for businesses working with innovative ideas, profitable projects, or sensitive information. Failure to use non-disclosure agreements can lead to major losses and give your competitors the upper hand. 

So, what is a non-disclosure agreement? If you want to know, keep reading this post! You’ll learn all about the information it contains and how to create an NDA for your business. 

How Does a Non-Disclosure Agreement Work?

Non-disclosure agreements are legal documents between two parties—one that discloses sensitive information and another that receives it. The agreement ensures confidentiality, which prevents the theft of intellectual property or exposure of private information. They are often required for potential investors, business partners, clients, or employees. 

How to Draft a Non-Disclosure Agreement

Writing a legally binding document is a tedious task, especially if you’ve never done so before. Most people hire a contract lawyer to write up their company’s NDAs. Still, you can draft your own NDA by following these steps. 

Step 1: Define the Scope

The information the signer should keep confidential is the scope. Your NDA should be specific so there is no room for doubt, and the signer knows what they are agreeing to. There is usually a catch-all clause in an NDA that includes any information that a reasonable person would presume to be confidential.

Step 2: List Obligations

If the signer has to take specific steps to keep the information private, make sure to spell these actions out in detail. 

For example, are they allowed to store confidential information on their personal devices? Do they need to take steps to prevent others from gaining access to their work email or documents?

Whatever preventative measures you will enforce, be sure to make them clear. 

Step 3: Define any Exceptions

If there are any situations where the signer may need to break confidentiality, write them in the NDA. Examples include legal proceedings or when working with subcontractors. Or, if you don’t permit confidential information to be shared with anyone for any reason, state this in writing. 

Step 4: Set the Terms

So, do non-disclosure agreements expire? It depends.

Sometimes NDAs are indefinite, binding the signer to permanent secrecy. In other cases, they expire after a certain period. 

Usually, the disclosing party prefers the agreement to last forever, but signers expect a reasonable time limit. Most NDAs reflect the interests of both parties, so there can be mutual trust and understanding

Step 5: Specify the Consequences

Breaching the NDA almost always leads to negative consequences, whether a termination of the partnership or legal action. Disclosing parties can often file a civil suit for the contract breach and sometimes criminal action. Thus, receiving parties should take their NDAs very seriously to avoid hefty legal fees.

Craft an Enforceable NDA to Safeguard Your Business!

With the steps in this post, you’re ready to act as a contract lawyer and create your own NDA. Still, drafting a non-disclosure agreement isn’t for everyone. If you need a hand, contact a commercial lawyer to help you create an NDA you can trust!

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