Non-Disclosure Agreement (NDA): What Is It, When It Should Be Used, and Agreement

The non-disclosure agreement (NDA) is a common document in the business world, but what exactly is it? What is it used for? When is it necessary to sign it? We answer these and other questions about the confidentiality agreement and non-disclosure of information in this article.

What is a Confidentiality Agreement or NDA?

A Non-Disclosure Agreement agreement or NDA ( non-disclosure agreement for its acronym in English) is a contract in which one or all of the parties that sign it agree to keep the information shared between them secret. That is, by signing the NDA, the parties agree to respect the confidentiality of the information that one, both or several of them are going to share and not to reveal it to other people or entities.

Non-Disclosure Agreement agreements can be signed between companies, collaborators or partners for a project, between companies and investors, between companies and industrial partners, between companies and workers, etc. It follows from this that NDAs can be signed by natural and legal persons.

Why sign a Confidentiality and Non-Disclosure Agreement?

There are different reasons for signing an information confidentiality agreement , but the main reason is always to protect specific information that one of the parties wants to keep secret for the duration of the relationship between them and even after its termination.

Thus, you should consider signing a confidentiality agreement when sharing:

  • Commercial information, such as know-how (how we do something, what processes we use), secrets (such as a recipe or software code), features or design of a product to be launched in the future, a brand or logo that we plan to record, financial or accounting information, etc.
  • Industrial, scientific, technical or technological information, such as that found in inventions or models that have not yet been patented, but that we want to protect (beware, because an NDA does not offer the same protection as a patent).
  • The confidentiality of personal data or sensitive personal information.

As you can see, any information is actually susceptible to being classified as confidential, the only thing that is needed is that one of the parties (the owner of said information) wants to protect its secret until it makes it public or not.

Normally, a confidentiality agreement must be signed with:

  • Companies or professionals with whom you are going to collaborate
  • investors
  • workers
  • Franchisees or licensees
  • Manufacturers
  • providers
  • Marketing and advertising agencies
  • Journalists
  • Testers and QA (quality control)

Points to keep in mind when drafting a Confidentiality Agreement

There are some points that we must take into account before drafting a confidentiality agreement between companies , between individuals or between companies and individuals.

The first is that confidentiality agreements can be of two types:

  • Unidirectional, when only one of the parties shares sensitive and confidential information with the rest of the NDA signatories.
  • Bidirectional, when in an agreement between two or more parties, all share some type of confidential and secret information. This type is common when it comes to companies that collaborate on an occasional basis.

Second, and related to the above, the confidentiality agreement always applies to the people who sign it, although not all of them always have the obligation to maintain secrecy, since in a unidirectional agreement, only one of the parties agrees to keep the other’s secret.

Third, the scope of the confidentiality agreement implies that the information it protects cannot be communicated in any way and by any means. Breaking an NDA can have legal consequences, which are normally collected and specified in the clauses of the agreement itself.

Fourth, when the confidentiality agreement is signed by a company, its content and obligations also apply to all its personnel. The terms of the agreement may determine who within the company may have access to confidential information.

Fifth, the confidentiality agreement is always signed before sharing any type of sensitive information or that you want to protect through this agreement. And its duration is also specified in the clauses themselves. It should be noted that there is confidential information that will always be confidential, for example, the recipe for Coca Cola remains a secret to this day. In any case, this will be included in the agreement itself; The usual thing is that it is between 2 or 4 years from the end of the contractual relationship, if the information that is protected has not been made public before.

Sixth, it is important to clarify that when we speak of a confidentiality and non-competition agreement , we are referring to an agreement that goes one step further than the NDA, since it includes an agreement by which one of the parties (or both in some cases) undertakes not to be a competitor of the other for a certain period of time, after having received sensitive information or commercial, industrial or technical secrets as a result of their contractual relationship.

Finally, it should be noted that when it comes to ensuring confidentiality between the workers of a company and the company itself, what is used for employees are the confidentiality clauses included in the employment contract.

Content of the confidentiality agreement or NDA

As with any other type of contract or agreement, for an NDA to be valid it must adhere to a format and content that must include, at a minimum, the following:

Content of the confidentiality agreement (NDA)

 

  • Identification of the parties that sign the NDA and undertake to comply with it.
  • Determine the information or secret on which the agreement is made, that is, on what matters the obligation to maintain confidentiality is established.
  • Determine the rights and obligations of each party, but especially of the party that will receive the confidential information that is the subject of the agreement.
  • Establish the duration of the agreement.
  • Place and date of signature.
  • Legal and economic consequences of not complying with the clauses of the agreement.
  • Means that will be used for the resolution of possible conflicts (mediation, arbitration and/or competent courts).

Finally, it is necessary to point out that given the complexity and scope of this type of agreement, it is always recommended to have specialized help or advice in the preparation of confidentiality agreements, so as not to leave any aspect uncovered.

The above content published at Collaborative Research Group is for informational purposes only and has been developed by referring reliable sources and recommendations from experts. We do not have any contact with official entities nor do we intend to replace the information that they emit.

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