The importance of having a non-disclosure agreement.
As your business grows, you will continue developing and defining your “secret sauce” – the products, services, and processes that make you successful. Another benefit of a growing business is expanding your team. Whether hiring employees or collaborating with other businesses, you are likely to start working with other people to continue moving toward your growth goals. But how do you form these necessary relationships without putting your “secret sauce” in jeopardy? That’s where a Non-Disclosure Agreement comes in.
A Non-Disclosure Agreement (NDA) is a legal document protecting confidential information. NDA’s are also known as Confidentiality Agreements, Confidential Disclosure Agreements, and Proprietary Information Agreements. They can be unilateral (only one party of the agreement signs it) or bilateral (signed by both parties). The contents of an NDA can be specific to a particular person or company, or could be general enough in nature to be used in multiple scenarios.
You may not think you need to use an NDA, but there are a range of industries and projects that can benefit from having a nondisclosure agreement in place. Essentially, if you’re sharing information with someone, and you want to swear them to secrecy, you should go ahead and spell it out in black and white in an NDA. You’ll be able to sleep easier at night, and you’ll have your bases covered if a situation requiring legal action ever arose.
It is possible for you to “DIY” your own NDA, although to air on the side of confidence, you may want to consult with a professional. A good NDA will always cover three basic components. First, it will define exactly what information cannot be shared, and will also detail if there are any exceptions or exclusions. Second, it will specify expectations and obligations of all parties involved. Lastly, it will provide a time period during which the NDA must be upheld.
The most valuable assets of your company are usually the intangible ones: the ideas, processes, and strategies that set you apart from the competition and bring you success. To let those ideas grow to maturity, you will need to let them out of the closet and collaborate with others. While you want to be able to trust the people you work with, a nondisclosure agreement puts everything in writing so there is no room for doubt.
We have had the privilege of working with an amazing local business lawyer who we can recommend without hesitation. If you want help constructing a solid nondisclosure agreement – or need help with any other legal aspect of business! – get in touch with Josh Barrett at Matchstick Legal.