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Non-Disclosure Agreement Key Elements
What Is A Non-Disclosure Agreements
In a nut shell, a non-disclosure agreement is a legal document between two parties agreeing to a confidentiality obligation. It means that one or both parties cannot disclose any confidential information which is specified in the agreement. With an agreement between a business and a contractor, the agreement will state that the contractor can’t disclose confidential information. An NDA is invaluable when it comes to protecting your business trade secrets and sensitive information.
Identifying The Parties In An NDA
There are two central parties in a non-disclosure agreement. These are the ‘disclosing party’ and the ‘receiving party’. It’s common practice for a company to ask a contractor to sign a non-disclosure agreement. Contractors should sign the agreement prior to commencing work with the company. This is because the contractor will likely gain access to sensitive information that could jeopardise the business. Those typically asked to sign an NDA are contractors, directors and employees. In summary, the ‘disclosing party’ will invariably be a business and the ‘receiving party’ will be the contracted entity.
Other Parties In A Non-Disclosure Agreement
The disclosing party can be a person or even spouse. In this case, the receiving party is someone outside a business scenario. For example, in the entertainment industry, artists ask friends and spouses to sign an NDA. For instance, with a high profile wedding, the bride and groom will request that all guests sign a confidentiality agreement. One example would be forbidding guests from taking and sharing photos of the wedding.
Definition of ‘Confidential Information’
What is the definition of ‘confidential information’ in a non-disclosure agreement? Confidential information anything not intended for public knowledge. Any data disclosing secrets of the trade is confidential information. It’s in the interest of a successful business that the companies in direct competition should not have access to sensitive information, such as trade secrets, clients and business model. The NDA’s narrative specifies what information is confidential. You should always refer back to the NDA’s narrative, which should clarify in simple terms, so that there are no doubts about what information is confidential.
Scope Of Confidentiality By Third Party
The company or disclosing party decides the scope of confidentiality. The third party is responsible for ensuring that sensitive information is secure. The disclosing party will make it clear who can have access to the information. The scope of confidentiality can include third parties not being allowed to use sensitive data such as trade secrets, to start a new business.
If you would like to draft or reveiw an NDA, please get in touch with one of our business lawyers. SG
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