Non Disclosure Agreements - What Are They, and Do I Need One?
A non-disclosure agreement (NDA) is a legally binding agreement that can be used between commercial parties to protect confidential or commercially sensitive information. NDAs, which are also known as confidentiality agreements, can be used in a number of contexts such as collaborations, negotiations, interviews or consulting assignments. Find out more, and get everything you need in PocketLaw's platform.
Why use an NDA?
The easiest way to protect information is not to disclose it in the first place. Sometimes, however, it will be necessary for commercial parties to share confidential or commercially sensitive information. An NDA can be used to ensure that information remains confidential whilst the parties are working together and after the relationship has ended.
Key points to consider
- What information is being disclosed: The NDA will describe the information that is being shared. Almost any type of information can be designated confidential information. The confidentiality obligations will only apply to the information that is described in the NDA so it is essential that the description is clear and accurate. You should also be careful not to describe the information too widely, as doing so makes it impractical to comply with and enforce the agreement.
- Why the information is being shared: The parties will be able to use the information for a permitted purpose (such as considering a partnership). The purpose will determine how the information can be used and any use of the information outside of the permitted purpose will be a breach of the agreement.
- Who the information can be shared with: The parties may need to share the confidential information with employees or certain third parties, such as financial advisers and consultants. The NDA should ensure that any third-party recipients of the information are also subject to confidentiality obligations. This can be done by requiring that the third-party enter into a separate NDA (known as a back-to-back NDA) on substantially the same terms as the original agreement.
- How long the information must be kept confidential: The NDA will require the parties to keep the information confidential for a period of time. The appropriate time period depends on the type of information shared but it is typically between one and three years. Longer time periods can be used but you should think about whether the information will continue to be confidential or commercially sensitive after a certain date – for example, revenue figures shared in the context of a partnership may no longer be commercially sensitive after the company publishes its annual accounts.
A few things to remember
- Sign before you share: Make sure the agreement is signed by both parties before you share the information! An oral agreement to keep information confidential will be very difficult to enforce.
- Only share what's yours to share: Don't share information that you don't own or have permission to share. Having an NDA in place with the recipient will not necessarily prevent you from breaching the confidentiality or intellectual property obligations you owe to a third party.
What type of NDA could be appopriate for you?
There are three types of NDA on the PocketLaw platform:
- Mutual NDA: This should be used where both parties are sharing confidential information with each other, for example, in the context of a business collaboration or merger.
- One way NDA: This should be used where information is only being disclosed by one party, for example, in the context of a potential investment in a company.
- oneNDA: This is a short, standardised agreement created by the team at oneNDA. It is a simple agreement that can be used where either one or both parties are sharing confidential information.
To access these NDAs and all other necessary contracts and templates your business would need, sign-up for PocketLaw today.
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