A Non Disclosure Agreement (NDA), or a confidentiality agreement, is a legal contract between two or more parties that outlines the confidential information they will share with each other and restricts the disclosure of this information to third parties.
NDAs are commonly used in business settings where two or more parties are considering a business relationship, partnership, or collaboration, and there is a need to share sensitive information while maintaining confidentiality. Business entities also require their employees to sign NDAs in order to protect their confidential information.
The objective of the Non Disclosure Agreement:
- Protection of Confidential Information
- Intellectual Property and Trade Secrets:
- Maintaining a Competitive Edge
- Confidential Business Strategies
- Client and Contractor Information
- Safeguarding Goodwill and Reputation
- Legal Recourse in Case of Breach
The main clauses of the Non-Disclosure Agreement are:
1. Introduction and Parties:
Identifies the agreement as a Non-Competence and Non Disclosure Agreement and outlines the involved parties – the Company and the Employee.
2. Recitals (WHEREAS):
This section deals with the background and reasons for entering into the agreement, highlighting the Company’s business, acquisition of confidential information, engagement in Intellectual Property assignments, and the need to safeguard goodwill and proprietary information.
3. Definitions and Interpretation:
A well-drafted agreement must define key terms used in the agreement to avoid any ambiguity that may occur in future. Here the non disclosure agreement Includes definitions for “Agreement,” “Business,” “Competitor,” “Confidential Information,” “Intellectual Property,” and others.
4. Confidentiality:
A non disclosure agreement must have a confidentiality clause. This clause prohibits the Employee from disclosing or using, for any purpose outside the scope of employment, any Confidential Information obtained during employment. It allows disclosure if compelled by government or judicial authority, with notice and assistance provisions.
5. Intellectual Property:
Requires the prompt disclosure of Intellectual Property developed by the Employee during employment. States that all rights in Intellectual Property belong to the Company, and the Employee irrevocably assigns such rights to the Company.
6. Dispute Resolution:
In any agreement, disputes may arise and a well-drafted agreement is one that provides dispute resolution mechanisms in agreement. The dispute resolution clause emphasizes the intention to resolve disputes in good faith through discussion or alternate dispute resolution forums or through court.
7. Miscellaneous Clauses:
Covers miscellaneous provisions such as the entire agreement clause, amendments requiring written consent, severability in case of invalidity, the duty of parties to act with due diligence and good faith, and the governing law and jurisdiction.
8. Execution/Witness Section:
Space for the names, titles, and signatures of the Company and Employee representatives, along with a date line.
These main clauses cover the essential aspects of the Non-Competence and Non Disclosure Agreement, addressing confidentiality, dispute resolution, and other critical elements to protect the interests of both parties.
