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Understand the Implications of a Non-Disclosure Agreement Before Signing.

Non-Disclosure Agreement Implications
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What to Know Before Signing a Non-Disclosure Agreement

Non-disclosure agreements (NDAs) are legally binding contracts that protect confidential information from being shared with third parties. They are commonly used in business and employment settings to protect sensitive information, such as trade secrets, proprietary information, and customer data. Before signing an NDA, it’s important to understand the implications of the contract and how to protect yourself.

What is a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) is a legally binding contract between two or more parties that prohibits the sharing of confidential information. The parties involved in the agreement are referred to as the “disclosing party” and the “receiving party.” The disclosing party is the one who is sharing the confidential information, while the receiving party is the one who is receiving the information.

NDAs are commonly used in business settings to protect trade secrets, proprietary information, and customer data. They can also be used to protect personal information, such as medical records and financial information. NDAs can be used in a variety of contexts, including employment, business partnerships, and mergers and acquisitions.

What to Look for in a Non-Disclosure Agreement

When signing an NDA, it’s important to understand the terms and conditions of the agreement. Here are some key points to consider:

  • Definition of Confidential Information: The NDA should clearly define what constitutes confidential information. This should include any information that is not generally known to the public, such as trade secrets, proprietary information, customer data, and personal information.
  • Obligations of the Receiving Party: The NDA should specify the obligations of the receiving party, such as the duty to keep the information confidential and the prohibition of using the information for any purpose other than the one specified in the agreement.
  • Duration of the Agreement: The NDA should specify the duration of the agreement. This should include the length of time the agreement is in effect and any renewal provisions.
  • Consequences of Breach: The NDA should specify the consequences of a breach of the agreement, such as monetary damages or injunctive relief.
  • Governing Law: The NDA should specify the governing law of the agreement, which is the law that will be used to interpret and enforce the agreement.

How to Protect Yourself When Signing a Non-Disclosure Agreement

When signing an NDA, it’s important to protect yourself from potential legal liability. Here are some tips to consider:

  • Read the Agreement Carefully: Before signing an NDA, it’s important to read the agreement carefully and make sure you understand the terms and conditions. If there is anything you don’t understand, you should consult a lawyer.
  • Negotiate the Terms: If you are not comfortable with the terms of the agreement, you should negotiate the terms with the other party. This can include changing the definition of confidential information, the obligations of the receiving party, or the duration of the agreement.
  • Limit Your Liability: You should try to limit your liability by including provisions that limit the damages you can be held responsible for in the event of a breach. This can include a cap on the amount of damages you can be held responsible for or a limitation on the types of damages you can be held responsible for.
  • Get it in Writing: You should always get the agreement in writing and have it signed by both parties. This will help protect you in the event of a dispute.

Conclusion

Non-disclosure agreements are legally binding contracts that protect confidential information from being shared with third parties. Before signing an NDA, it’s important to understand the implications of the contract and how to protect yourself. Be sure to read the agreement carefully, negotiate the terms, limit your liability, and get it in writing.

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