Non-Disclosure Agreement Template

In business, a lot of information changes hands between two or more parties. Some of this information is sensitive and may be crucial for some parties involved. The one way to protect confidential information is a Non-Disclosure Agreement. A Non-Disclosure Agreement or an NDA is usually used to protect information about a company or an idea of the company against violation.

Non-Disclosure Agreements are signed when a business idea or an invention is presented to a potential business partner, an investor, or a distributor. When marketing or financial information is shared with a potential buyer of a business, it is a good idea to draw up an NDA. When new technology or a new product is shown to a potential licensee or buyer, an NDA is imperative. When services are received from an individual or a company with the prospect of them having access to confidential information in the line of their duty, a Non-Disclosure Agreement should be signed. NDAs should be signed by employees who are allowed access to proprietary and confidential information about a business, in their line of duty.

Some key elements of a Non-Disclosure Agreement are the identity of the parties involved. This can be simply done by mentioning the parties involved and naming them the disclosing party and the recipient, as the case may be. If there is a third party or parties involved, they should also be mentioned in the Non-Disclosure Agreement. The definition of the information that is considered confidential should also be included in a Non-Disclosure Agreement. The confidential information disclosed to other party (or parties) needs to be clearly outlined. It should have a wide gamut to prevent misuse of almost all the information of the company. The receiving party or parties should know what they may or may not use. Most confidential information is in writing. Sometimes, oral information too is deemed confidential.

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The scope of the obligation of confidentiality by the party receiving the information must be a part of a Non-Disclosure Agreement. The scope of an NDA is two-fold. The receiving party (or parties) is under obligation to keep whatever confidential information they have a secret and to not use this information to further their own interests. The information that is excluded from being treated confidentially is included in most NDAs. The information that is usually a part of exclusions is information that is known to the recipient already and information that is public knowledge prior to the signing of the NDA. It also includes information that is developed independently by the other party without using or referring to the confidential information disclosed by the giving party.

If the recipient gets information through another party that is not bound by the Non-Disclosure Agreement, this information is also a part of the exclusions. If the recipient is legally obliged to disclose certain information, that is part of the exclusions also. The timeframe of the confidentiality agreement is a very important part of an NDA. Whether a Non-Disclosure Agreement should be limited by time or last forever depends on the industry the business are in. In some industries, the pace of change of information is very fast and after a few years, the NDA is rendered ineffective. Also, the cost of policing confidential information and obligations forever is an expensive prospect. This is why most NDAs have a term of two to five years.