What Should a Non-Disclosure Agreement Contain?

What Should a Non-Disclosure Agreement Contain?
non-disclosure agreement

A non-disclosure agreement (NDA) is a legal contract that keeps a party or both parties involved in a deal from revealing any information. Business owners and private individuals use it to protect trade and personal secrets. Thus, an NDA establishes a confidential relationship between those involved, and a breach carries legal implications.

An NDA, whether unilateral or mutual, can be complex or straightforward. It becomes the former when there are several secrets you need to protect. For instance, those who want to safeguard trade secrets would draft a more lengthy and complicated NDA. However, whether the NDA is complex or straightforward, there are pieces of information it must contain.

This article looks at the information a non-disclosure agreement should contain. If you need to draft an NDA for your business, our Connecticut business lawyers can help you with it. We also offer excellent legal advice and representation.

When Should You Use an NDA? 

Businesses use a non-disclosure agreement in the following circumstances:

  • Between employers and employees
  • For upper management job interviews because confidential company information comes up during these interviews
  • When employing independent contractors or consultants
  • When interviewing vendors
  • When they are buying stocks
  • When dealing with people who handle confidential company information like accountants, tech developers, product review employees, etc.

In any of the above situations, the company creating the non-disclosure agreement would seek to protect:

  • Customers
  • Business operations and accounting information
  • Marketing, product, and service
  • Trade secrets — recipes, manufacturing information, or formulas
  • Intellectual property
  • Computer technology

What Does an NDA Contain? 

Every non-disclosure agreement is unique, and its content depends on the intent of the company and the industry it belongs to. Generally, it would include the following:

  • Time frame
  • The explanation of confidential information and a list of what it is and isn’t
  • Information about all the parties involved
  • The information of ownership of a particular product, e.g., an app developed while working with a tech company.
  • Information about signing the NDA

Some typical details included in the agreement include the following:

  • Definition of Confidential Information: It includes everything that falls under the contract and must have a stamp of “confidential” on it. Your Connecticut business lawyer would add all the information you want as a secret and mark them as confidential.
  • Explanation of Purpose of Disclosure: This clause explains why you’re giving confidential information to the person signing the agreement.
  • Parties to the Agreement: It contains the names of those whom the agreement binds: the discloser and the recipients.
  • Disclosure: If the recipient agrees to keep the information secret, they will have access to it.
  • No Disclosure: This clause explains how vital the non-disclosure agreement is. It might include a “best effort” clause, a “need to know” basis for the information shared to the recipient, and the recipient will protect the information the way they would their own.
  • No Use: Here, the recipient agrees not to use the information in any way other than what the NDA states.
  • Miscellaneous: You can include other information in this section. Some of them could be:
    • Who pays legal fees
    • How to resolve disputes
    • The state law to use if there is a breach of agreement
    • Whether the agreement binds heirs and assigns
    • If there is a need to return confidential materials
    • If the discloser owns all the information
    • Restrictions on the recipient hiring the discloser’s employees or working with a competitor, usually within 12 to 24 months

What Is the Importance of Non-Disclosure Agreements? 

NDA’s are essential for several reasons. As mentioned earlier, one key reason why most employers use them is to keep their employees from sharing trade secrets, proprietary knowledge, client information, product information, and strategic plans. Another is that it keeps people from making a profit on any secret company information.

Furthermore, confidential agreements help companies retain ownership of products developed or produced when the recipient worked with them. The preceding also includes things that are written and invented. Lastly, NDA’s are more concrete than oral or implied agreements from the company or employee’s conduct.

In the event of a breach, it acts as proof that the employee agreed to keep the information confidential. It takes away the back and forth arguments of who said what. In all, it is more beneficial to create an NDA than not to create one.

Need Help Drafting an NDA? Contact Our Connecticut Business Lawyers

Do you need a non-disclosure agreement to protect your proprietary rights as a business owner? Or do you have an employee in breach of an NDA and want to take legal action? Whatever the need, our Connecticut business attorneys at Aeton Law Partners are here for you. To get started, contact us today for a consultation with our business law experts.

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