What is an NDA?
NDA stands for non-disclosure agreement. This is an agreement that protects a company’s confidential information. NDAs can be unilateral, meaning that only one party to the agreement is required to protect the other party’s confidential information. NDAs can also be mutual, meaning that both parties to the agreement agree to protect the other party’s confidential information.
One example of when a company would use an unilateral NDA is when it hires an independent contractor. In this situation, the independent contractor may be exposed to confidential information during its engagement with the company or the company may be required to give the independent contractor confidential information in order for independent contractor to complete the work for which the independent contract was engaged. To ensure that the independent contractor does not use or disclose the company’s confidential information, the company would have the independent contractor execute an NDA.
An example of when a company would use a mutual NDA includes when the companies determine whether to go into business together. In this case, both parties must disclose confidential information to the other party in order for the parties to make an informed decision. In this case, both parties have an interest in protecting their confidential information and a mutual NDA will provide this protection.
What are Typical Elements in an NDA?
Definition of Confidential Information
A company can define what it considers confidential in its NDA. Many NDAs contain a long list of information which is considered confidential, but there are certain categories that cannot be protected, including 1) publicly available information; 2) information provided to the party before the NDA is signed; and 3) information the party received from a third party. Because of this, it is important for you to keep confidential information confidential by not releasing such information to the public or disclosing it to a third party who does not have any obligations to protect your information.
Standards of Protection
An NDA will provide the standard under which the party receiving confidential information must protect that information. Generally, NDAs provide that the receiving party must protect confidential information with the same degree of care that it uses to protect its own information and in no case, with less than reasonable care.
In addition, NDAs generally provide that confidential information can only disclosed to third parties to the extent that they need to know the information and only if they agree to use the same degree of care to protect the information as agreed to in the NDA.
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