Even before the internet, companies still had to protect themselves from having third parties sharing their private information. Of course, it has gotten even harder to protect this sort of thing today. That’s why it’s a good idea to reach out to a Connecticut business lawyer right away and make sure your company is protected.
What is an NDA and Why Would You Need It?
An “NDA” is a non-disclosure agreement. It protects your company from having a third party disclosing confidential and private information about the company. They are common when dealing with the following types of companies:
- Creditors
- Clients
- Suppliers
- Employees
- Independent contractors
Many of these agreements are intended to protect intellectual property. This could include anything from recipes for tomato sauce to client lists with contact information. Some people are surprised when they learn what sort of companies use these agreements. A pizza place or a donut company may be the last sort of businesses that would need an NDA. However, they’re more common than you may think.
There are Two Main Types of Non-Disclosure Agreements
There are two kinds of non-disclosure agreements. Most of these agreements are of the first type – unilateral agreements. These involve situations where the company drafts the agreement, and the other party agrees to sign it. For example, if you get a job as a finance manager at a bank, they may ask you to sign an NDA. However, the company isn’t signing anything in return.
There are also mutual NDAs. These are more common when dealing with a joint venture or partnership agreement. This sort of agreement protects both parties. It also outlines what the penalties would be for breaching the agreement. Once the contract is signed, both parties are held to it and, if they breach, a lawsuit will likely be filed. In addition, many parties to these contracts can file for an injunction to prevent the other party from disclosing any information in the meantime.
What Sort of Information Does an NDA Protect?
Most instances where a company needs an NDA involve trade secrets or private information. You may not need to have a cashier at a local pizza restaurant sign and NDA. However, if you hired a consultant to draft promotional materials for an up-and-coming product, you would want one. Since most business owners aren’t quite sure when they need a non-disclosure agreement, it’s a good idea to just give us a call. We can sit down and discuss the situation. It’s better to get good advice before the fact than good legal advice afterwards.
In certain industries, companies won’t hire anybody without having them sign both a non-disclosure agreement and a non-compete. This is so that your employees and partners aren’t able to share any private information with third parties. It’s also so that your employees can’t go to work for a competitor and share all of your private information.
What If Somebody Breaches Their Non-Disclosure?
Most non-disclosure agreements outline the damages for breach in the agreement. Typically, most plaintiffs will demand compensation for lost profits. They may also decide to pursue criminal charges depending on the nature of the breach. Generally speaking, the courts interpret these agreements rather broadly. If the two parties disagree about whether certain content was included, the courts are likely to err on the side of caution.
When it comes to breach, the courts are not as liberal. The plaintiff in these sorts of cases will have to submit specific evidence showing that the defendant breached the agreement. For example, if an NDA states that a consultant isn’t allowed to share the company’s client list, an email sharing such information would serve as proof.
Call and Talk to an Experienced Connecticut Business Lawyer Right Away
If you’re considering entering into a partnership or hiring someone to fill a crucial role at your business, you need help. You don’t want to do this sort of thing without protecting your company. Depending on what sort of business you manage, you may need a non-disclosure agreement. The best way to get this done is to talk to a Connecticut business lawyer. You’d be surprised how often these agreements are used. It’s one of those things where you’re better to have it and not need it rather than need it and not have it.
It’s a good idea to have your agreement prepared before you enter into any final negotiations. You should make an NDA part of your standard on-boarding procedures. This way, your company is protected in all situations. In order to get the process started, call our office and schedule a time to come in and meet with one of our expert business attorneys.