Confidentiality agreements are very important to businesses, big or small. And when it comes to such agreements, Non-Disclosure Agreements (NDAs) is the most commonly used term. So, what are Non-Disclosure Agreements? They are legal confidentiality agreements or contracts that highlight the information that should be kept confidential when an organization enters into business with a different party.
With a fast growing economy, there is an exceptional increase in the number of jobs. And because of new employees are joining your company, there is an urgent need for businesses to protect their trade secrets. The main purpose of any confidentiality agreement is to ensure that the parties involved signing an agreement asserting that they will not misuse the trade secrets for their own personal gains.
Therefore, big or small, a business should have such agreements, especially when discussing plans for the business, implementing unique techniques and procedures, etc. In any case, when trade secrets are disclosed by any of the parties that could lead to lawsuits and in worst case scenario’s prosecution.
Who prepares the NDAs?
Generally, Non-Disclosure Agreements ( NDA’s) are prepared by the Human Resource Department or the company’s corporate lawyer. If you do not have a business lawyer, do not panic. There are different contract drafting organizations that will be more than honored to draft an agreement contract for you if you visit their site.
What you must understand though is that a Non-Disclosure Agreement does not state the nature of information, that should be protected but rather protects any kind of detail that is a trade secret. For instance, a Non-Disclosure agreement can contain details of a chemical formula used to make a specific product. By signing this agreement you’re agreeing you will not by any margin disclose the information to any other person in the competitive world of the business.
Furthermore, after the other party signs the agreement, your business is assured that no trade secrets, details, plans or implementations will be leaked to its competitors. It is also up to the organization or company creating the NDA to decide when, where, and how the other parties can pass some of that information on and to who.
When is a Non-Disclosure Agreement Necessary?
When introducing a new product –when a new product is introduced, the first thing the company looks for is a good advertising agency to push the product to the market, right? Well, as the organization introducing the new product, you should enter into a confidentiality agreement with the advertising agency stating that no details about the new product will be passed to the competitors.
When purchasing license rights – a Non-Disclosure agreement is also important when purchasing franchise rights, especially if you are buying from a renowned brand.
In conclusion, regardless of the size of your business, if you have some trade secrets that are worth protecting, (please) get a Non-Disclosure Agreement. If you can’t do it yourself, you can hire commercial contract drafting services to help you draft an agreement.
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