Businesses use Non-Disclosure Agreements (NDAs) to protect confidential and important information from landing in the wrong hands. Basically, an NDA establishes how two parties (like employers and employees or business partners) will interact with the confidential information.
However, for an NDA to be enforceable, it must contain certain elements. Besides naming the parties involved, here are three crucial provisions that you need to include in an NDA.
The scope of the NDA
For a non-disclosure agreement to hold, it must protect specific confidential or “privileged” information. And while this may seem straightforward, far too many NDAs end up having ambiguous provisions that can easily be challenged in court.
While drafting the agreement, be sure to cast your net wide by specifying that the protected information may not be shared via emails, hand-written notes, oral communication, letters or any other form of documentation.
Some of the confidential information you may want to protect include business secrets, proprietary information and intellectual property.
Each party’s obligations to the NDA contract
It is important that the NDA clearly defines each party’s obligations and requirements. Specifically, the receiving party should understand that they are expected to protect confidential information at all times and refrain from using it for unintended purposes. This provision should also outline the consequences of mishandling confidential information.
Exclusions to the NDA
There will be instances when the receiving party will interact with the confidential information while executing their duties. For instance, an employee may be required to disclose information that is otherwise protected by the NDA to a third party who requires that information for an approved job. For example, authorities might require an employee to disclose confidential accounting information for legal investigations.
A strong non-disclosure agreement protects your business’ confidential information from abuse. Find out how you can draft an NDA that safeguards your business’ interests.