Non-Disclosure Agreement Form

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A non-disclosure agreement (NDA), also known as an NDA or a confidentiality agreement, is a contract that prevents one party from releasing secret information binds a recipient of secret information, including trade secrets or proprietary business information, to outside parties. If the party violates the non disclosure agreement, they could be liable for damages. A non-compete agreement should often be used with an NDA to prevent a business or individual from performing competitive activities in the same industry.

What is a Non-Disclosure Agreement (NDA)?

A non-disclosure agreement (NDA), sometimes referred to as a non-disclosure form or NDA form, is a contract for a business relationship where the parties involved agree to enter a confidential relationship to protect the information described in the agreement.

Mutual VS Non-Mutual NDA: What’s the Difference? 

A mutual non-disclosure agreement means that both sides share sensitive information related to business practices with each other. Both parties are bound to keep that information confidential. With a non-mutual NDA, which is also referred to as a unilateral NDA, only one side shares information. The recipient is legally obligated to not share that information with others.

Other Names for NDAs  

NDAs are also called confidentiality agreements, proprietary information agreements, confidential disclosure agreements (CDA), hush agreements, or secrecy agreements (SA).

When Do You Use an NDA? 

Here are some situations where NDAs are commonly used:

  • Presenting a business idea to a potential partner or investor

  • Sharing information about your business or demonstrating new technology to a prospective buyer

  • Giving employees access to information that isn't common knowledge so that they may successfully meet their obligations

Here are two situations involving intellectual property (IP). IP is a specialized and highly defined idea, thought process, or information that you want to protect. It can be a unique process, copyrighted material, trademarked material, or patented material that isn't available to the general public.

Not NDA-Appropriate: An idea for an oxygen-driven robot that makes macaroni and cheese.

NDA-Appropriate: An idea - including blueprints, calculations, and a list of potential materials - for an oxygen driven robot that makes macaroni and cheese.

The first idea is just that: an idea. It seems original, but from a technical perspective, someone else could have thought of it. The second idea warrants a simple non-disclosure agreement because it includes data: specific plans, blueprints, calculations, and a list of materials. That information can be used to bring the idea to reality. In other words, it contains intellectual property that someone else couldn't just think of. It is, therefore, in need of official legal protection.

Types of Relationships Between Parties That May Benefit from an NDA

  • Employment/Service NDA: Sometimes, employees need sensitive, company information to do their jobs. When that’s the case, the employer uses a standard NDA. The employee is required to sign before they start their job. The NDA essentially makes the employee promise that they will maintain the secrecy of company-specific activities that are considered a trade or business secret. It may also include a provision that says if the employee leaves, they cannot disclose what they learned for several years. 

  • Business Purchase/Sale NDA: An NDA for a business purchase or business sale is used when the seller will disclose information (this may also include financial information) about the business before the sale is finalized. Sometimes, showing this information, and how it is used in the business, can facilitate the sale.

  • Invention NDA: An invention NDA is generally used when someone is looking for a commercial partner after they’ve invented something. This promises the inventor that the person or business they’re presenting their invention to will not steal the idea or the prototype. 

If you are a business owner using a confidential disclosure agreement, you're asking that person to sign something requiring them to not share information that may be disclosed to them. Breaking the terms of this contract could entail serious legal repercussions. 

Common information covered in an NDA includes, but may not be limited to, client information, trade secrets, investment strategy, a unique invention or patented idea, a marketing plan, a plan for a new manufacturing process, a document that is being prepared for publication, or test results revealed to lab workers. 

For an employee or a business partner asked to sign such an NDA, you’re being asked to sign because you’re going to receive certain information. Your signature promises that you won’t share that information. You must understand your obligation. If you do not uphold your duties, you could open yourself up to a lawsuit.

What Are the Components of an NDA?

While there are endless possibilities of what may be included in an NDA, most share the following elements:

  • Parties to the agreement: Who is disclosing the private information (i.e. “the disclosing party”)? Who is receiving it? Are there any other parties involved in the agreement (e.g. affiliated company, partner, agent, etc.)?

  • Specification of what information is covered: What information must remain confidential? Is it only information shared between the two parties in writing? Does the agreement also cover information shared in conversation?

  • Scope of confidentiality obligation: What responsibility does the receiver have to keep the information confidential? Generally speaking, the receiver should keep the information secret and use it properly. If the document is broad in scope, the disclosing party can sue for damages if the recipient breaches the NDA.

  • Exclusions: What information is excluded from the NDA? If any information shared between the two parties is publicly available, that information is automatically excluded from the agreement. Other information might not be confidential and the disclosing party may not require it to remain secret.

  • Term of the agreement: How long will the NDA last? Remember to check your local law. For example, in California, an NDA is generally unenforceable, but the term limit for one in Texas would depend on if trade secrets are mentioned in the document.

  • Other provisions to consider:

    • Employee solicitation: Can the recipient solicit or hire your employees? Are they prevented from doing so for a particular length of time?

    • Jurisdiction for disputes: If there is a dispute over the NDA, how and where will the conflict be handled? Must any potential legal proceedings occur in a particular city?

    • Injunction: An injunction is an action (generally a court order) that prevents the other party from breaching the agreement if they try to do so.

These are just the basics. Some jurisdictions may have additional provisions for this sort of contract. When drawing up yours, be sure to check local laws for any requirements.

At the top of the document, you’ll see a title indicating that it is an NDA. Under the title, there should be a section specifying the full names of the primary parties involved. They may be referred to as the disclosing party and the receiving party. 

If the involved parties are an employer and employee, the parties as “employer” and “employee.” For businesses and independent contractors, it may be written as “business” and “contractor.” Next, there should be a statement that the two parties agree not to disclose the referenced information. The description of that information is included later in the document.

The next section is the main part of the agreement. It outlines the information that must not be disclosed. The information should be defined as precisely as possible. There may also be a component of the contract in which exclusions are specified. 

Another component explains the obligations of the receiving party. These obligations center on the requirement of the recipient to keep the information confidential unless they have written permission from the disclosing party to share it.

There may be a section that lists the period of the contract, as well as any severability clauses. These are conditions under which the contract may be terminated. At the bottom of the agreement, you should include sections for both parties to print and sign their names and to write the current date.

Legal Forms Related to a Power of Attorney

  • Living Will: A Living Will is a legal document that provides detailed, written instructions for your medical care if you become unable to make decisions on your own behalf. 

  • Last Will and Testament: A Last Will and Testament is a legal form that determines how an individual’s assets, such as property, will be passed on to family members and assigned individuals upon one’s death

  • Codicil: A Codicil is a legal document that allows an individual to make updates and changes to a last will and testament.

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Sample Non-Disclosure Agreement

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