Non-Disclosure Agreements

Non-Disclosure Agreements

What is a non-disclosure agreement?

A non-disclosure agreement is between two parties, typically two companies or a company and an individual, and is developed to protect a company’s private, confidential, or secret information. These agreements are used to protect the competitive advantage that one company has over another. Non-disclosure agreements are typical in the electronic field, but can apply to any trade secret, including formulas to develop specific products. A non-disclosure agreement can be either unilateral or mutual, depending on the parties who are involved. 

Unilateral agreements are the most common type of non-disclosure agreements and require that one party’s information is kept private. This information may be kept private for various reasons, some information is simply confidential, but this can also apply to patented information. 

Mutual agreements are typically made when two parties are working on a joint venture or are considering a merger. In the case of a mutual agreement, two companies are mutually exchanging confidential information.

What is found in a non-disclosure agreement?

There are five basic parts to a non-disclosure agreement. These parts include:

1. A definition of confidential information
   1. This section of the agreement outlines the information that is to be protected and is specific with regard to the exact information that is to be kept private.
2. Exclusions from confidential information
   1. This section of the agreement outlines the information that is excluded from the agreement and is eligible to be used by the receiving company.
3. Obligations of the receiving party
   1. This section of the agreement outlines the obligation of the receiving party and limits the use of confidential information. It is the responsibility of the receiving party to protect the information and to keep it private. 
4. Time period
   1. This section of the agreement outlines a specific period when the agreement shall remain effective. The time period varies depending on the agreed upon period between the two parties and is often negotiated amongst the two.
5. Miscellaneous provisions
   1. This section of the agreement is used to establish other terms of the agreement, such as, which state’s laws will be applicable, whether one party will be awarded attorney fees, or whether arbitration can be used in the event of a lawsuit.