What businesses need confidentiality agreements for? The value of information has long exceeded the value of material objects, and even more so in the field of information technology. From social networks, news, we hear about the leak of information, which leads to the collapse of reputation and business.
One of the effective ways to at least somehow take control of information security is the Confidentiality or Non-disclosure (the so-called NDA) agreement. Yes, the conclusion of the NDA is gaining in popularity, but unfortunately, this is half the battle. NDAs are often signed “blindly” by the parties, that is, without special legal analysis. And this is a big mistake! In this article, we invite you to understand what a confidentiality agreement is and whether it is worth drawing up carefully before signing it.
Not to be disclosed
The parties to the NDA agreement agree to share information which contains a secret value and is used for a specific purpose, however, it also undertakes not to disclose this information to third parties. Thus, the NDA allows companies to share their business information with others, limiting these individuals in their actions with confidential information.
Businesses related to intellectual property can’t do without NDAs otherwise they might find themselves bankrupt quite soon. If negotiating business transactions, as well as discussing ideas with contractors are an integral part of the company’s work, you need to protect the business information as the biggest treasure. Verbal promises that confidential information will not be shared with third parties won’t do. From a legal point of view, you have to state it clearly in writing to reduce the risk of intellectual property rights violation. Learn more about how to protect intellectual property rights with IQ Decision UK.
How to draw up a non-disclosure agreement correctly
Usually, the NDA agreement can be prepared in formats: a mutual non-disclosure agreement or a unilateral non-disclosure agreement. Let’s take a look at both.
When only one party discloses confidential information, a unilateral confidentiality agreement is appropriate. If we are talking about the case when both parties transmit confidential information to each other for a specific purpose, then an NDA of a mutual format will be the best option. The latter is the most common type, its fundamental difference from the former is that both parties mutually exchange confidential information. This type of agreement is common, for example, when firms are considering joint ventures or mergers.
What to do if the confidentiality agreement is violated
Unfortunately, as practice shows, the NDA does not give 100% guarantee that the disclosed information will remain confidential with the other party.
It is important to understand that the NDA is primarily preventive in nature, and the better the agreement and the responsibility for the disclosure of confidential information is written, the less likely it will be disclosed.
Other important provisions
The NDA is primarily intended to:
- Prevent the fact of disclosure of confidential information by the employee / counterparty.
- Stop the disclosure of confidential information when it is revealed.
- To hold liable for disclosure and to make the party responsible for disclosing confidential information obligated to compensate the losses of the innocent party.
However, the agreement may also contain other rights and obligations that are not related to confidentiality. For instance:
- Provisions for non-competitiveness. Potentially, the parties to the agreement may also include those provisions that prohibit other parties from competing with the company in certain areas. Such a provision is the non-competitiveness provision.
- Non-solicitation clauses. This kind of provision is intended for the purpose that the parties undertake not to “lure” employees, as well as potential customers and suppliers of the other side, as a rule, for a certain period of time.
- GDPR. If personal data is disclosed to the other party, you should consider the legal grounds for such disclosure and include in the NDA the relevant provisions on the personal data protection (GDPR).
How can we help you?
Drafting an NDA is an efficient method of protecting confidential information for both small and large businesses. The IQ Decision UK company will help to maintain trade secrets, unique ideas and concepts of your business that will distinguish you from others and increase the competitiveness of your company in the market of goods and services. For advice on how best to protect your business and its reputation, contact experienced lawyers at IQ Decision UK.