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April 10, 2017

How To Ensure Your Non-Disclosure Agreement is Enforceable

For many businesses, their success is very reliant on their ability to effectively protect their confidential information from competitors and others.

For example, within the food and drink industry it could be a recipe. Many businesses rely on confidentiality on a daily basis to ensure their business success is protected.

In these instances it is vital to have an enforceable non-disclosure agreement in place.

Also known as confidentiality agreements, non-disclosure agreements (NDAs) are very useful for protecting your company’s confidential details.

For example, when two parties enter into discussions for the first time, in order to explore the potential for a future business venture.

During such talks it is likely that confidential information will be shared and it is important to make sure that if the discussions go no further, the information shared will not be placed at risk.

It is important however that the NDA is correctly drafted or there is a risk that it will fail to offer sifficient protection, or be unenforceable.

The main points to consider for ensuring the best protection are the following:

  • Confidential information – This will be a specific definition with the agreement and sets out the information that is being protected. It is critical that the information in question falls with this definition or it will not be protected.
  • Exceptions – There are exceptions to the definition of confidential information. If the information was already public, becomes public, or is provided to the receiving party by a third party it will cease to be confidential information.
  • Purpose – This will be a defined term in the agreement spelling out the exact purpose for which the receiving party can use the info. The definition must be broad enough to facilitate the discussions, but narrow enough to prevent inappropriate use.
  • Group Companies – Is the receiving party a company which is part of a group? Will it need to share the confidential information with other businesses within its group? Such consideration needs to be reflected in the NDA.
  • Mandatory disclosure – It is important to keep in mind that there are some types of disclosure that cannot be prevented by an NDA. 
  • Term – How long should the obligations last?
  • Relationship between the parties – A well drafted agreement will include provisions which make sure that no formal relationship is formed between the parties and that no obligation is placed on the parties to continue.
  • Additional provisions – If you are given an NDA to sign, there is a possibility that additional obligations such as non-solicitation, or non-compete clauses will have been added.

This article is for information only and should not be used as formal legal advice. This article was also published here by business news Wales.

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