Why an NDA is Important to Business?

Greece/August 2014

A non disclosure agreement (NDA) is a legal document stating that one party gives his/her consent not to reveal the confidential information that he/she knows about the other party. Usually NDA’s arise from a working relationship between an employer and an employee. An NDA will protect the employer from having his/her employees using confidential information against the business such as conveying the information to competitors. An NDA is also used when an inventor contracts with the manufacturer to make prototypes of an invention.

Any person that has access to confidential material should sign an NDA and the agreement should be signed before that person has access to the confidential information.

Ensuring that a well-drafted NDA is signed by those who will access the confidential business information is crucial to managing a successful company. The things you need to take care of are the following:

• To determine if the NDA is necessary for instance if the information under discussion is publicly known

• To determine which information is confidential. In particular, you must clarify what the confidential information pertains so that the employee is aware of his/her obligations and what he/she is allowed to discuss or not.

• There are also occasions where you need to clarify the circumstances under which the employee can reveal confidential information such as in case  of a court order or any other order by a public authority

• You must also be clear that the employer maintains the rights to the confidential information. In particular, the employer maintains the ownership of the confidential information.

• You also need to state the remedies for breach of the NDA such as monetary compensation. Of course the purpose of the NDA is not to gain money out of it but to discourage the party receiving the confidential information to disclose it as this results in loss of profit and credibility for your business.

• Another important clause of your NDA should be that one of the governing law and jurisdiction as well as the arbitration resolution of any future dispute between the parties.

• When you are in discussions with a legal entity which has employees and you should reveal confidential information to this entity, you need to request from this legal entity to have its own employees signing a NDA as well.

• Last but not least, it is of vital importance to get advice from an attorney regarding the drafting of an accurate and detailed NDA. It is noted that a tailor-made NDA is much better than a free downloadable NDA. Some times people want to save money and they believe that they can just download an agreement and use it but this is not advisable. It is better for a businessman to invest some of his/her money in reliable and accurate legal consulting instead of trying to find cheap but unreliable agreement templates via the Internet.

Chryssa Tsiotsi
Source: http://blog.yellowpages.com.mt/