This is where an NDA can be useful. An NDA is a legally binding promise by someone to keep your sensitive information confidential, and not use it for their own ends or in another way you don't want them to.
If the promise is broken, it can often be enforced through the courts. Unfortunately, even if you have a great case, taking someone to court tends to be extremely expensive and time-consuming. You're probably better off throwing your money into a pit and lighting it on fire.
However, on top of providing legal protection, NDAs can be used as a signal to another party that you are serious about confidentiality, to the extent that you're willing to make them sign a legal document so they know how important it is. Think of it as being like foreign policy during the Cold War. Everyone knows you're probably not going to press the nuclear button, but most people would rather not find out.
The good news is that preparing an NDA is really straightforward using Accord's simple, free NDA template generator.
Who would sign an NDA?
If you're engaging with an independent contractor to do work for your company, it's likely that your contractors will come across sensitive information about your company that you'll want to protect. In these cases, it's often a good idea to have them sign an NDA before they start any work with you.
Employees / Prospective Employees
Not all companies will need their employees to sign NDAs — most employment agreements will deal with confidentiality already.
However, if your employees are working with particularly sensitive information within your company, you should consider having them sign an NDA for extra protection. It's also common to see companies require prospective employees to sign NDAs if they come into contact with sensitive information during the recruitment process, particularly when hiring for higher level positions.
If you're partnering with another person or organization in a joint venture or some other kind of business relationship, you will want to carefully consider the level of exposure they'll have to any sensitive information about your company. It'll often be a good idea to require business partners to sign an NDA to minimize the risk of your confidential information being leaked or used inappropriately.
Drafting an NDA
The term "Non Disclosure Agreement" might sound intimidating, but the Accord NDA template is relatively simple. Here are a few things to consider next time you're drafting one:
One-Way NDAs vs Mutual NDAs
There are two main types of NDAs. Most NDAs are One-Way, which are used when only one party is sharing confidential information. An example of this is if you are sharing your codebase with an independent contractor who is working on your software. Mutual NDAs are used when both sides have confidential information to exchange. For example, you may use a Mutual NDA with a business partner if you want to collaborate with them on a joint venture.
Who are the parties?
An NDA is between a Disclosing Party, who provides the information, and a Receiving Party, who receives it.
While NDAs are between two specific parties, they will usually also allow confidential information to be disclosed to the "representatives" of the Receiving Party. This means that employees, agents or advisors of the Receiving Party will also have access to confidential information.
How long should an NDA last?
Most NDAs don't last forever. NDA confidentiality obligations will usually expire after 1-5 years, though this will depend on the type of transaction you're working with.
Though it may be tempting to prepare an indefinite NDA, you may find yourself having a hard time getting your counterparty to agree to it. In most cases, it's fine to let your NDA expire after a certain period of time. As time passes, proprietary information tends to become public or less valuable. Roadmap features are shipped; financial information becomes stale; and previously bombshell disputes become water under the bridge.
What is excluded from the NDA?
Not everything will be covered by the NDA. For example: public information, information the party has already received or independently developed, and information the other party legally has to disclose will usually be excluded from NDAs.
Create and sign a simple NDA using Accord's templates for free
Creating an NDA is easy using Accord's NDA generators. You can easily select which options you want for your custom NDA, enter in details of the parties, and send it out for signing, for free.
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