Most people have been asked to sign a non-disclosure agreement (NDA) once in their life. It appears to be a standard practice for companies to ask for one. What is an NDA to be exact?
It's a contract that ensures that a company's sensitive data is not being shared without some type of permission. Anybody who signs the NDA promises to keep confidential and proprietary information private. This contract can be one-sided or mutually agreed upon, depending on the information to be protected.
Most people see NDAs are something only businesses with product innovations or extremely sensitive trade secrets would use. However, small businesses can also benefit from an NDA. It can protect against the unlawful use of all kinds of information such as customer lists, product designs and formulas, pricing strategies, sales leads lists, financial records, manufacturing processes, and business and marketing plans.
What does an NDA Consist of? The following information is included in an NDA:
- Involved parties
- Information to be kept private
- Any exclusions
- Scope of obligation to ensure information stays confidential
- Consequences should there be a breach of the contract
Small business owners can turn to the Internet to find templates that help them to create an NDA. However, an attorney may also be hired to develop one. Even if a small business owner creates their own, they should have an attorney look it over to ensure the important information is added. Although it's an easy-to-understand contract, it should still be reviewed by a professional because it is a legal document.
Sign up for our newsletter to receive industry news and updates!
Providing technology news, insights and tips for small to medium businesses.