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Non-disclosure & non-competes

NDA 101: What Is a Non-Disclosure Agreement?

Have you ever had secret information your business needs to tell its employees, but you worry  that they will tell others your secret?  Sounds like you may need a contract lawyer’s help.

A Non-Disclosure Agreement (NDA) or Confidentiality Agreement, is a contract or a written agreement used when one party intends to disclose confidential information to another party who agrees to keep the information.

An NDA contract creates a legal commitment to privacy and demands those who agree to keep the information secured.  However, often times NDAs do not call for damages or define defaults. 

NDAs are commonly used in business settings, as they offer a definite protection of trade secrets and other confidential information meant to be kept under the veil of secrecy.

Information commonly protected by NDAs might include a drawing or a plan for a new product, client information, sales and marketing plans, or an industrialized process.

Using a non-disclosure agreement means your information will remain a secret, and if not, you’ll have the right to take legal action and might even be able to sue for damages if your contract lawyer helped you draft it right.

Thomas Howard

Thomas Howard

Contract Lawyer

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What is an NDA?

A: Basically, an NDA is a legally binding contract that creates a confidential relationship between a person who holds sensitive information and a person to whom the information will be disclosed.

NDAs normally serve three key functions:

  1. NDAs protect sensitive information. By signing an NDA, the recipients promise not to reveal or let go of information shared with them by the disclosing party. If the information is leaked, the disclosing party has the right to claim breach of contract.
  2. Help the inventor or business keep their rights to its Intellectual Property (IP). Often, public disclosure of a new invention can cancel patent rights. A lawyer can help you properly draft an NDA to protect the creator hold onto the rights to the IP.
  3.  Outline what information is private. The agreement serves as a document that classifies absolute and confidential information.

The type of information covered by an NDA is almost unlimited. Any knowledge or information exchanged between the parties involved can be considered confidential.

Putting it all together: Elements of an NDA

Some issues that are commonly addressed in an NDA include:

  • The parties involved;
  • The definition of confidential information, i.e. the information that is to be held as confidential, such as unpublished patent applications, financial information, business strategies, schematics for a new product, etc;
  • The exclusions of confidential information, such as information that are generally available to the public or data collected before the NDA was signed;
  • The disclosure period, i.e. the time period of confidentiality, e.g. one year from the date of the NDA whereby the information is to stay silent during that period

When might an NDA be useful?

A: NDAs are commonly used by businesses any time when confidential information is disclosed to potential investors, clients or employees.

Information protected by attorney-client privilege and doctor-patient confidentiality is essentially covered by an encompassing Non-Disclosure Agreement – but with more teeth.

NDAs help assure that confidential information remains protected in many legally binding situations.

Before signing NDAs, it is important to know how these contracts work.

It is better to be well informed of the conditions set out in the NDA by a lawyer as it will help you to make the right decisions now and down the road.

Please note that this article does not contain any legal advice. If you wish to seek for legal advice, call our law offices in Peoria, Illinois, at (309) 740-4033.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.

R. Martindale

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