As a businessman or woman, there comes a time when the need for expansion arises. To expand, you will need to hire more employees, pitch to potential investors for funding and so forth. As you go about this, you will have to share your business ideas and information some of which are very confidential to you. One risk with sharing is that these third parties may use these ideas and confidential information for their benefit. To cure this and encourage entrepreneurs and inventors to share ideas and confidential information with third parties Non-Disclosure Agreements (NDA) were invented.
What are NDA and how do they work?
NDAs are agreements or contracts in which parties agree not to disclose confidential information shared as they do business together. The importance of non-disclosure agreements lies in the fact that they allow you to share your ideas or information with the feeling that you are protected or where they are still stolen or shared with competitors or third parties, you have recourse in law. That said, when do you need to do an NDA?
You may have already guessed right when you need to do a non-disclosure agreement. NDAs are needed whenever confidential information is to be shared with potential investors, employees, and suppliers. The list goes on. The aim is to help deter theft of your intellectual property and enable an atmosphere of trust in business.
Are NDAs enforceable, you may ask?
They are enforceable and legally binding so far as they meet the requirements of a valid contract.
What do I stand to gain with an NDA?
Some of the benefits of NDA are:
By having a Non-Disclosure Agreement with employees, potential investors, clients etc. The expectations of parties are defined.
NDAs help protect trade secrets and other confidential information.
It gives an easy case for the sharing party if he has to resort to the courts for damages.
It is also worth noting that NDAs will not be enforceable;
Where the language used in the agreement is broad.
Where the information protected is not confidential
And where the NDA pertains to an illegal act.
Final Thoughts on NDAs
Lastly, a sharing party could enforce NDAs through injunctions against the party in Breach as well as asking for financial damages for losses suffered as a result of the breach.
