In the course of doing business, it's inevitable that you'll have to share this confidential information with employees, colleagues, investors, etc. A little preparation now may save a legal headache—and a potential loss of business—later.
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by Michelle Kaminsky, Esq.
Writer and editor Michelle earned a Juris Doctor degree from Temple University's Beasley School of Law in Philad...
Updated on: April 19, 2024 · 3 min read
If drafted well, nondisclosure agreements, also called NDAs or confidentiality agreements, can protect your business's non-public information, such as trade secrets, patents, designs, client lists, and marketing research. Not sure if your small business needs an NDA? Read on.
An NDA is a legally binding contract between parties who agree to keep certain information confidential. The information may be shared during the course of employment or during a business transaction or interview. NDAs may be "mutual" (both parties have confidential information to protect) or "one-way" (only one side is disclosing confidential information). The side getting the information is often called the "receiving party."
In either situation, when someone who has agreed to protect secret information violates the NDA, the other party may sue for injunctive relief to stop the release of information and recover damages—possibly including lost profits.
NDA can be used to protect any business information that gives you a competitive edge but is not known to the general public.
Examples of information that may be protected include:
Make sure any NDA you have drawn up includes the following elements:
There's a good chance that the thing that makes your business unique is also the thing that makes it successful. Whether you have an innovative business plan, a secret recipe, or a great invention, confidentiality may be the key to your business's success.
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