In business, there are circumstances in which you may want, or be required, to share confidential information with another party. The key to sharing such information safely is to ensure the other party is bound to respect the confidentiality of the information provided to them, as such information cannot be assumed to be automatically confidential. If you need to share commercially sensitive information, yet maintain confidentiality, a non-disclosure (NDA) agreement is the most effective way to achieve this.
What is a NDA?
An NDA, also called a confidentiality agreement, is an agreement designed to protect such confidential and commercially sensitive information.
An NDA represents a binding contract, ensuring that any parties who are the recipient of your company’s confidential information, have limited means with which the information can be used. NDAs primarily prevent any party from gaining a competitive advantage as a result of receiving confidential information.
Why use an NDA?
NDAs are useful at the initial stages of commercial transactions, where two parties wish to enter discussions, with a prospective view of entering into a formal contractual relationship at a later stage.
There are various examples of circumstances which often require the disclosure of financial and other company sensitive information, such as:
- Acquisitions and Joint Ventures
- Intellectual Property
- Distributors and Suppliers
- Employees and Directors
How does an NDA work?
Generally, NDAs should be formulated before the information sharing process begins, to ensure that confidentiality is protected from day one. For example, the sharing of non-patented or non-copyrighted materials or ideas with other parties, is highly risky where no prior NDA has been created. It is for you to determine the content, duration, and extensiveness of a NDA’s coverage, which should reflect the sensitivity of the information which you intend to share.
NDAs can be unilateral, so that only one information party – the party privy to another’s confidential information – is bound by the NDA. Additionally, they can be mutual, where both information parties are bound to each other’s respective confidentiality.
Ironmonger Curtis solicitors have extensive experience and expertise in drafting both mutual and unilateral non-disclosure agreements, and we appreciate the commercial sensitivity of your confidential information to your business.