A non disclosure agreement (NDA) protects the sensitive and confidential information of a business or entity.
It is a legally binding document that prevents the person receiving the information from disclosing it to an unauthorised third party. Some non disclosure agreements also specify the terms under which the information is accessed and shared.
Types of non disclosure agreements
There are two types of non disclosure agreements – unilateral (one-way) or mutual (involving both parties).
Unilateral NDAs are the most common. It is used when a business grants access to confidential information to an employee or another organisation, and the party receiving this information agrees not to disclose any of it to unauthorised third parties.
A mutual NDA, on the other hand, is a mutual agreement where both parties agree not to share any of the information. This is used mostly in B2B arrangements where both parties have vested interest in the information.
Three important things to know about non disclosure agreements:
1. A non disclosure agreement is only valid if its signed
It is important that information is not shared unless an NDA in writing is obtained and signed by both parties.
While it is easy to download a template off the internet, it is better to have a commercial business lawyer prepare the non disclosure agreement and provide legal advice. Then you can be assured that your business interests will be covered.
2. Other protection
Businesses can further protect their confidential information by designing information security policies like dissemination of information on a need-to-know basis only and having better firewalls for their IT systems to prevent digital theft and hacking.
3. Safeguarding your interests
No business can operate on a simple handshake anymore. If you are working with another company on a joint project, it may be better to consider signing a mutual agreement from the start. Sometimes a project may start with a one-way flow of information, but circumstances may change as the project progresses. A carefully worded agreement can ensure that all your interests will be protected.