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4 Common Uses of Non-disclosure Agreements (NDAs)

In our work life, we often process various information that can either be considered confidential or may be transferred to other people with limitations. Some of the information we use may have a high secrecy level.

For such cases, there is a legal form called NDA or non-disclosure agreement that parties sign when a transfer of confidential details takes place.

Such agreements ensure that none of the concerned parties will reveal any of the secrets discussed. If this eventually happens, there are various sanctions that parties agree on and include in the document. The responsible person that has said or written more than they should have may need to pay a fine.

In some cases, when the information is extremely confidential, the person who revealed it might go to jail. There are different levels of secrecy, and they vary from specialization to specialization. For instance, people who work with governmental information are sometimes required to follow the highest level rules.

Different types of NDAs are used for different purposes. We will touch on this topic here as well; also, you may check the non-disclosure guide by FormsPal to find out more.

Every non-disclosure agreement has three basic elements without which it is impossible to sign the form. These elements are parties (discloser and recipient) and confidential information itself (about which parties agree).

The disclosing party, simply called the discloser, is an individual who shares information that should be kept secret. The receiving party, or the recipient, is a person who obtains such information and is responsible for keeping it to themselves. The information can be different, too: confidential data about people and budgets, trade secrets, know-how, and so on.

So, how can NDAs be used in daily business life? Here are some examples regarding the usage of such agreements in the working environment

1. Agreements for Workers Who May Access confidential Data in Working Processes

Probably, such forms appear most often when an employer hires someone who will later gain access to confidential details.

Even if there is no plan to give access to a worker, many employers still prefer to sign NDAs just in case. This gives an additional level of protection to the information used at work.

There are two reasons why employers care so much about secrecy. First, any employee who starts working may eventually leave the company and go to another.

There, they may share confidential info with their new colleagues and management, leading to a disaster for the first company. Its competitor will get access to details that may let them win on the market.

Secondly, one day a worker who has many secret details may decide to leave and launch their own company. Experience plus confidential info and trade secrets can be the key to success for the new company and a way to failure for the old one.

Sometimes giving an agreement template makes sense even before hiring a person. It is a rather rare case, but during some job interviews, you may share sensitive details. So, maybe you need to ask for the agreement, not when the individual has already gotten the job but when they come for an interview at your company.

If you are an employer who cares about your company’s valuable data, ensure that anytime you hire someone, they sign a well-developed NDA before their first day at work.

This will allow you to get a bit calmer about your business data sharing and safety. Specify your company’s template together with lawyers and correct it in conformity to the new worker’s position and duties.

While you may find plenty of agreement forms on the Internet, you had better adapt the template for your entity.

2. Agreements for Those Who Sell their Inventions or License them

When a fundamentally new product or technology is invented, its author may look for investors interested in the invention’s development or try to license the invention.

It would be best for both cases if the author drafts an NDA in advance and asks for all parties’ signatures during negotiation. This will lessen the risk of revealing unique knowledge to competitors or other third parties.

3. Agreements for Companies that Use Their Clients’ Data

Nowadays, personal data protection is one of the essential things. People tend to control where their details go and how they are processed. Companies, in turn, promise to keep individuals’ data safe and do not share it with third parties.

This is confirmed by signing a specific NDA: a client gets one before getting services or products. In this agreement, conditions prescribe that the client does not mind giving their personal information to the company.

Usually, when you share your name, phone number, address, email address, birth date, and other details, you expect no one to have access except the company, and no third party will bother you with phone calls or emails.

However, unfortunately, in some countries where people’s data is not protected well, individuals may face undesired calls and letters because their personal info was transferred to third parties, and they use it despite the signed NDAs and promises.

4. Agreements for Those Looking for a Business Partner or Investor

Imagine that you run a company, and one day you decide to broaden it. You realize that you cannot omit the help of investors or even potential partners. You start negotiation with several parties who are interested.

During the talks, you share various data that is rather sensitive: your company’s numbers like revenues and expenses, workers’ salaries, plans for future deals, and so on.

If you do not prepare an NDA in advance, some of the investors or partners involved in those talks may accidentally (or not) reveal important details that you have shared. Create a unified template that parties can sign before negotiation. Thus, you will have higher chances to protect your data and leave your secrets untouched.

These are the most common ways of using non-disclosure agreements nowadays. Again, because data protection today is a priority, such forms have great significance in the modern world.

So, if you still have no template like this in your practice but now feel like you need it, do not hesitate to draft one and consult lawyers and specialists about the form.

What to Write in NDA: Brief Guide

If you are still unsure about what to write in the agreement besides the parties’ names and information types, here is our quick guide regarding the topic. In every such form, you should include:

Full Names and Signatures of all the Parties

Just names are not enough—all the concerned parties must leave their signatures on the agreement.

The Date and Contract Terms

These agreements cannot be eternal: usually, parties sign them for a certain period. Do not forget to enter the current date in the form and write the date until when the document is valid.

Confidential Info Description

In the agreement, the author should define what info is considered confidential and provide exceptions. This description must be clear so the signatory understands what exactly they can and cannot share.

Obligations and Punishment

The agreement should define what obligations all parties have and what punishment and remedies will follow if someone breaks the contract’s rules. The consequences can be different and are normally determined by the discloser: it can be a fine, a dismissal, or other sanctions.

Other Conditions

Like in many other legal forms, an author may include a section with miscellaneous conditions in such agreements if needed.

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