Secrets are a part of the business world, whether the secret involves an upcoming project or the signing of a big client. These secrets help businesses keep a competitive edge and also from drawing undue attention to a deal before it is finalized. It is not only established businesses that try to information confidential, but also startup companies who want to keep their ideas under wraps. Whatever the reason, there is an aspect of business law that can help their information remain confidential—non disclosure agreements.
How does a nondisclosure agreement protect information?
Whenever a businessperson or investor is about to disclose confidential information to another party, he or she should consider entering into a nondisclosure agreement with the other party. By putting the information down on paper, identifying the parties and the extent of the confidentiality agreements, it is possible to protect one’s sensitive information for an indefinite amount of time. If someone breaks the nondisclosure agreement, there are penalties attached, that can include monetary damages and perhaps criminal charges.
What can I protect in a nondisclosure agreement?
Proprietary information could include any information that is important to the business. Whether someone is hiring a new employee, attracting new clients or new investors, or finding a new partner, the exchange of confidential information will likely happen. This can include proprietary formulas, client lists, recipes, sales contact lists, accounting figures that are not available to the public or any information that differentiates one company from another.
Different types of business situations and information exchanges require different types of nondisclosure agreements. Those who wish to enter into a binding agreement protecting their sensitive information should consider consulting an experienced attorney for guidance on how to proceed.