Non-disclosure agreements (NDAs) are essential legal agreements for maintaining the integrity of a business. NDAs apply to both partnerships and employee contracts for making sure that there are legal protections in place for proprietary information at your company. Competing in crowded markets with companies that may have access to different funding options or scalability than yours means that you need to prevent the dissemination of confidential and proprietary information crucial to your business.
Being upfront about the need for NDAs
By maintaining transparency in a partnership and employee agreements, a business can make sure that all parties involved in its business understand what information is subject to public knowledge and what information is more sensitive and confidential. For products, unwanted disclosures can jeopardize patent opportunities. For service-based and consulting firms, confidential information could reveal customer lists and profiles. Here are some common concerns surrounding NDA use:
- Litigation costs: Without an NDA in place, the cost of litigation could quickly become exorbitant due to the lengthy proceedings of investigations and the amount of information needed for a particular case.
- Low formation price: An NDA is often relatively inexpensive to draft and implement, considering the potential losses that could occur from intellectual property losses.
- Enforceability: NDAs should be as specific as possible, to delineate those most critical intellectual assets to a company and what would be more damaging if released without that company’s consent.
- Third-party disclosures: Anyone who has access to your proprietary information should sign an NDA. This list includes contractors and the employees of firms you deal with.
Knowing when to disclose important company information
You want a wide range of deterrents in preventing the disclosure of essential company information. Though an NDA allows for litigation against the party in violation, a lawsuit can rarely compensate the full extent of economic damage that unwanted disclosures to a competitor create. Managing who has access to sensitive information, even with NDAs in place, is crucial to maintaining the integrity of that information. Don’t let an inadequate NDA put your business at risk. Contact a lawyer with experience in commercial business litigation and non-disclosure agreements to explore the intricacies of these agreements.