Connecticut entrepreneurs with novel, innovative ideas are eager to share them with others. They may need investors, business associates, and other parties to get their proposals off the ground. Before sharing their ideas, however, they will want to make sure no one will steal and profit off of them. The best way to do this is by having other parties sign non-disclosure agreements. Aeton Law Partners’ business attorneys assist the legal needs of Connecticut businesses, large and small. We also help entrepreneurs bring their ideas to life.
What to know about non-disclosure agreements
A non-disclosure agreement, or NDA, obligates parties to keep certain business discussions confidential. They exist to foster the exchange of ideas that is necessary to innovate and start new businesses. Using an NDA, entrepreneurs can freely have conversations without worrying that someone will steal their ideas.
Not every business discussion requires an NDA. As a general rule of thumb, the more specific the idea, the more beneficial a non-disclosure agreement will be. For example, simply telling your friends you want to start a new social media network would probably not necessitate an NDA. Conversely, you should adopt an NDA before presenting those friends with the unique computer software underlying the social network.
Any time you plan to share sensitive, confidential data with business associates, investors, or others, take a pause first. Would you want the public to learn of this information? If not, then you need to seriously consider using a non-disclosure agreement.
What to include in your NDA
Every NDA is unique to the parties and information involved. You will therefore need to talk to an attorney to find out which terms to include in your NDA. However, as a general matter, the agreement should at least contain:
The identities of the parties. You should identify the individuals and/or entities who will have access to your ideas. With respect to businesses, be sure to accurately and properly identify them. If any individuals represent companies, ensure they have the authority to act on behalf of those businesses.
Description of the information to be shared. This can be tricky, especially if you send draft NDAs to the parties. After all, you don’t want to disclose too many details before the agreement is executed. An experienced Connecticut business law attorney can assist with this section.
How the information may be used. The parties with access to your ideas will be able to use it in some way. The question is which uses are and are not permissible. Your goal should be to limit access to this information by third parties. For instance, you may not want to allow a potential investor to share your idea with others in the financial firm.
Exclusions. In this section, you list ideas or information not subject to the NDA. As an example, you may have previously disclosed certain details of your idea to other people. You likely will not be concerned if the parties to your NDA know of this information.
Duration of the NDA. Many entrepreneurs include time limits to the NDA, after which it expires. Why include this provision? One possible reason is so the other parties don’t have to constantly worry about inadvertently sharing protected information. A limitation to the NDA will make it more likely that other parties will sign onto it.
Let Aeton Law Partners Serve Your Legal Needs
If you’re an entrepreneur ready to launch your new business idea, find out how Aeton Law Partners can help. Our firm can assist with non-disclosure agreements along with many other aspects of Connecticut business law. To learn more, give us a call today.