Perhaps one of the most disastrous things that can happen to your business is having your trade secrets and other confidential information disclosed without your knowledge. When this information falls into the wrong hands, especially your competitors, they can use it to gain an unfair advantage. In some cases, your data might even be sold for profit.
This is why executing non-disclosure agreements is so crucial. NDAs are legally binding contracts that protect your most sensitive information against unauthorized sharing or disclosure. They also provide legal recourse in the event that confidential information is leaked or shared without authorization.
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The Different Types of NDA and When to Use Them
There are several different types of NDAs. Each of them is designed to address different situations or scenarios. In this section, we will explore some of the most commonly used types and their use cases.
Unilateral non-disclosure agreement
In this type of NDA, as the name suggests, only one party discloses confidential or proprietary information. The other party, or recipient, is bound by the terms of the agreement not to disclose or use the information for any purpose other than the intended purpose.
One of the most common uses for unilateral NDA is when you are developing a new product and need to share details about the development with your manufacturer. This written agreement ensures that the design, formula, or mechanism of your product or service remains a top secret.
This type of NDA can also be enforced when you are seeking investors. You can sign a contract to ensure that they never divulge any information about your product or service to other parties.
Bilateral non-disclosure agreement
Unlike unilateral, bilateral agreements involve two parties mutually sharing vital information with each other. The NDA ensures that both parties agree to keep everything they’ve disclosed confidential for an agreed period of time. It also assures all contracting parties that the information will only be used for its intended purpose.
You can commonly see this type of NDA when two companies merge or they enter into a partnership or joint venture. During any of these business arrangements, all parties are expected to share vital information in order to achieve a common goal or complete a business transaction.
Multilateral non-disclosure agreement
When there are three or more parties involved, all of whom are sharing important business information, it’s best to enforce a multilateral NDA.
This type of NDA comes in handy when you are collaborating with multiple parties for a single project or endeavor. All concerned parties must sign a multilateral non-disclosure agreement to ensure that everyone’s shared information remains private and confidential.
7 Key Elements of an Ironclad Non-Disclosure Agreement
The importance of a well-written and ironclad NDA can never be overstated. It’s vital in protecting the rights and interests of all the contracting parties. Moreover, it also ensures that every piece of information being shared or disclosed is kept private and secure.
A solid NDA can provide a better understanding of the expectations and obligations of each party. Most importantly it establishes a legal framework for protecting confidential information.
To ensure that your NDA is airtight, here are some elements that you should include:
1. Definition of confidential information
First things first, you need to clearly define the type of information that should be considered confidential and subject to protection. This could include details such as technical data, customer lists, business plans, design specifications, financial information, and other proprietary information.
2. Scope of the agreement
Once everything’s explicitly defined, the next thing to do is discuss the scope of the NDA. Who are involved? What’s the duration of the NDA? And for what specific purpose can the confidential information be used? These are just some of the important details to include when writing the scope.
3. Obligations of the receiving party
It is integral to identify the duties and obligations of all contracting parties. What can and should they do with the information? It should clearly state everyone has the responsibility to maintain confidentiality.
4. Exceptions to confidentiality
One key element that should also be in your NDA is the exceptions to confidentiality. You also need to specify which data can be disclosed. This could include information that is already publicly available or information that must be disclosed by law.
5. Remedies for breach
It is important to lay the groundwork for what must be done in the event of a brief. The provisions for remedies could be in the form of injunctive relief, damages, and attorney’s fees.
6. Governing law and jurisdiction
The NDA should specify the governing law and jurisdiction in the event of a dispute, and whether the parties agree to mediation or arbitration to resolve any disputes.
7. Termination of the agreement
An ironclad NDA, no matter the type, should include provisions for the termination of the agreement. This typically includes the circumstances under which the agreement may be terminated and the obligations of the parties upon termination.
How to Write an NDA: Tips and Best Practices
Given the importance of this contract, many find writing NDAs to be a daunting and intimidating task. To help you out with such a feat, here are some tips and best practices to keep in mind when drafting an NDA:
- Use clear and concise language. You must use a language that is plain and easily understood. Make sure that there aren’t any ambiguous words or phrases to avoid misunderstandings.
- Use a template. Instead of writing the agreement from scratch, feel free to use templates. Don’t forget to tailor the agreement to your specific needs and circumstances.
- Consult with an attorney. It’s always a good idea to have your legal team or lawyer review your NDA. This ensures that all key elements are present and the contract provides adequate protection.
- Monitor compliance. An NDA is more than just formality. Regularly check compliance with the NDA to ensure that confidential information is being adequately protected.
- Switch to online signing. When signing an NDA, there can be a lot of back and forth, which can cause delays. To speed up the process, use an electronic signature to sign the documents.
Securely Sign NDAs in Minutes with Fill
If you ever had to undertake the task of writing and signing NDAs, you would know how complex and time-consuming the whole process can be. But with Fill, you never have to experience the inconvenience of manual document signing methods.
Fill is packed with features and functionalities that can simplify the process from drafting the agreement up until the NDA is valid and enforced. We have a rich library of templates you can use and customize to your needs and preferences. And our electronic signature solution offers a paperless way of signing agreements.
Since NDA is all about protecting your most sensitive information, we also offer military-grade encryption to ensure that your contracts are safe from breaches and unauthorized access. Our intuitive platform also allows you to verify the signer’s identity in just a few clicks.
There’s a lot more Fill offers. So what are you waiting for? Sign up today.