5 Key Components of a Non-Disclosure Agreement

5 Key Components of a Non-Disclosure Agreement

Employment lawyers deal with a wide range of employment issues, offering representation to both employers and employees.

If your business involves sharing confidential information with employees or other third parties, you may wish to consider a Non-Disclosure Agreement. This agreement prevents the parties involved from sharing or providing privileged information to other parties. It is also designed to protect your business or idea from theft.

Here are five of the key components that must be included in an effective Non-Disclosure Agreement:

1. The names of the parties involved.

The names of the parties involved must be included in the agreement. In addition, if either of the parties will be sharing the confidential information with other third parties, those individuals or companies should also be outlined the document. For example, if one party expects to share the information with an affiliated company or use an agent, then those should be covered as well.

2. The scope of the confidentiality agreement.

This usually means that the person receiving the confidential information will only share it with people who need to be aware of the information in order to conduct the business. The party named in the Non-Disclosure Agreement must make reasonable efforts to keep the information confidential. They also have an obligation to make others in the company aware of the confidentiality conditions if they will have access to the confidential information.

The second part of the scope usually deals with ensuring the person or company receiving the confidential information cannot use the information for themselves.

3. Defining what is considered confidential.

A clear definition of what is considered confidential is vital. Grey areas or obscure terms open the door to one party claiming it wasn’t aware of the specific nature of what is considered confidential. Is information provided orally covered? Make sure this is clear as you don’t want issues to arise because someone verbally passes on information that the recipient then repeats or uses for other purposes.

4. The length of the agreement.

The length of the agreement will depend on the nature of your business. If you’re involved in the technology sector for instance, technology can change very rapidly so a shorter term may be reasonable as “old” information quickly becomes obsolete. Regardless of the length of the agreement, make sure you protect other legal rights such as copyrights, patents and intellectual properties.

5. Exclusions

Exclusions are necessary as there may be other factors involved. If some of the information is already public it can be excluded. If information is developed by the recipient on their own without making reference to the confidential business, it may be excluded. Information the recipient is required to provide under a court order may be excluded as long as the other party is made aware of the legal action.

Non-Disclosure Agreements provide the necessary protection to ensure your business can develop and grow its products or systems without worry. Make sure your employment lawyer is involved in your specific situation to fully protect your interests.

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