Non-Disclosure Agreements Defined
A Non-Disclosure Agreement, or often referred to in the shorthand as an NDA, is a legally-binding contract that initiates a confidential agreement between parties, being the party that owns sensitive data and the party that will receive such data. Signing an NDA means that the signer agrees to keep confidential data and information secure from outside sources. Additionally, the signer agrees to keep the information private by not sharing the information without the owner’s consent. And lastly, the signer agrees that they will not edit, copy, or utilize the data or information that is unauthorized by the owner.
Where do non-disclosure agreements come into play?
Non-disclosure agreements are involved in scenarios where confidential information needs to be protected, like in the following instances below:
- Medical and lab employees that read test results prior to the patient
- Client information that a company works with
- Blueprints and plans for new technology to be produced by a software company
Non-disclosure agreements essentially ensure that confidential data and information stays secured in myriad of circumstances. Prior to drafting an NDA, it’s necessary to have a solid grasp on how they function and what purpose they serve. In this way, you can be equipped to make proper legal choices in the future.
The Purpose of Non-Disclosure Agreements
Non-disclosure agreements serve as a written agreement that can proactively protect sensitive data and information. If you don’t use an NDA, then you run the risk of releasing private data to the public or having it be tampered with and used improperly by vendors, customers, employees, and others that have access to the data. With a non-disclosure agreement, you ensure that those receiving your proprietary information are aware of that fact that confidentiality is expected. If they fail to hold up to the terms of the non-disclosure agreement, you are given authority to take legal action.
The Three Main Functions of Non-Disclosure Agreements
#1: Protect Private Information
Signing an NDA means that the participant is entering into a legally-binding agreement that promises they will not share the information given to them by the counterparty. In the case that information is divulged, then the injured party can take legal steps and claim that the contract has been breached.
#2: Maintain Patent Rights
This function of a non-disclosure agreement only applies to circumstances where a new concept, design, or product is made where the confidentiality agreement aids in maintaining patent rights for the individual (or party) that invented the item. A carefully designed NDA is a great tool for creators because it can help them maintain the rights to their ideas. Oftentimes, publicly disclosing new inventions will void patent rights, so designing an NDA is smart option.
#3: Defines Which Information To Protect
In a non-disclosure agreement or a confidentiality agreement, there will be a clear delineation between which data is allowed to be shared and which data must be kept private. In many scenarios, the agreement will be the single source of truth that states which information is exclusive or not.
Examples of Confidential Information
- Inventions and product designs
- Client information
- Sales leads
- Contract information
- Pricing structures
What information is not confidential?
- Public knowledge
- Independently generated information
- Information legally attained from a counterparty
- Mutually agreed-upon non-confidential information
- Information where the owner gives recipient consent to share
Writing a Non-Disclosure Agreement
You can easily build a non-disclosure agreement with Dock 365 within minutes. Using our template library, generating an NDA is simple.
Let’s discuss some of the details included in the structure of an NDA.
- Owner of the proprietary data or information
- Recipient of proprietary data or information
- Parties might be an entire company or a single person
The Fine Details (Confidential Information)
- Clearly defined terms regarding what information is confidential
- The rationale behind why the confidential information is being given to the recipient
- Duration of the confidentiality agreement
- Requirements pertaining to non-circumvention
Let’s take things a step further. A non-disclosure agreement always clearly defines what information is to be kept confidential, categorizing the different types of information specifically covered within the agreement. In this manner, a non-disclosure agreement carefully spells-out the rules and the main subject of the contract without sharing specific private information.
A non-disclosure agreement will also exclude select information from being kept private, this is because excluding some details could inhibit the information currently deemed as common or public knowledge. This also applies to data gathered prior to signing the non-disclosure agreement.
Non-disclosure agreements clearly communicate how recipients of confidential and proprietary information are expected to keep the information private and only use the information in specific ways. So, what exactly does this mean for the recipient of the information? It’s simple – don’t breach the agreement. Breaching a non-disclosure agreement might also look like giving outside sources access to the proprietary information via unsuitable and inappropriate methods.
Something often negotiated upon when creating a non-disclosure agreement is the time period or duration of confidentiality. The time period is something very commonly stated within an NDA, and it typically requires that the party to receive the propriety information remains silent about such information for a specific time frame – most commonly, a set number of years.
With the help of Dock 365, you can draft, access, modify, and copy NDA templates on any digital device at any time. With your completed agreement, you send it off for electronic signature instantly with our Sertifi eSignature integration. Tracking versions and maintaining clear collaboration and communication is easy with Dock.
What are the legal implications of a non-disclosure agreement?
When a non-disclosure agreement is appropriately executed, it is considered legally bound. However, if you desire to take legal action, here are a few key items to strongly consider:
- Was confidential information accidentally and unintentionally shared?
- Is the confidential information easy to find in other sources?
- Are there pieces of data that prove the recipient of the confidential information was the source of the leak of information?
- Did the information leakage cause financial damages to your organization, and what evidence is available to prove these damages?
- What are the protections available within your state against an unfair scope?
The Duration of a Non-Disclosure Agreement
In general, the duration of a non-disclosure agreement lasts for the amount of time that the proprietary, confidential information is considered a usable piece of data. Some piece of information benefit by being kept private indefinitely, while some information more reasonably should be kept confidential for a couple of years. As with everything, this specific factor is entirely context dependent.
Breaking a Non-Disclosure Agreement
If there is either illegal activity present or a misrepresentation of fact (such as fabrication or omission of critical contract details), then you may break a non-disclosure agreement.
We hope this served as a help overview regarding non-disclosure agreements. Here at Dock, we are experts in SharePoint and Office 365 and want to help business utilize their features to revolutionize and streamline contract management. Our Contract Management System is equipped with several amazing features that will help improve the quality of your contract management processes with the help of a SharePoint and Office 365-based collaborative software interface. Improve business dealings, increase contract compliance, reduce bottlenecks and turnaround times, enhance risk mitigation efforts, and completely overhaul contract management team productivity for the better with our contract management software.
Ready to get started today? Reach out to us to learn more about our Dock 365 Contract Management System.
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Written by Lindsey Paulk
Lindsey Paulk is a Content Writer in Jacksonville, Florida that specializes in digitally communicating all-things contract management.