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As a business owner, you are aware of the valuable nature of some of the information stored by your company. Confidential information can include salary levels, confidential business negotiations, intellectual property and trade secrets. Regardless of the definition, it is true to say that most companies will want to protect certain information from disclosure to others. Many companies in England use non-disclosure agreements (NDA) to protect against unauthorised disclosure of sensitive information. This article will explore the main advantages of using a commercial lawyer to handle an NDA for your company.
What is a Non-Disclosure Agreement?
These documents are commonly referred to as NDAs or confidentiality agreements. A non-disclosure agreement is a legal contract. It limits the ability of another person or organisation to disclose your confidential information to other parties.
NDAs can be agreed upon with companies and individuals. They are common in situations where outside disclosure could cause reputational or financial harm to the disclosing party.
Situations to Use an NDA
Your company may need to disclose confidential information to another party at various times. Some common examples may include the following:
- pitching future projects to potential investors;
- engaging external consultants to assist your business plans;
- sending confidential designs to external manufacturers;
- engaging financial advisors or tax experts to help with your company’s finances; or
- starting a joint commercial venture alongside another business.
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1. Ensuring Legally Binding Wording in Your NDA
Non-disclosure agreements are complex legal documents, and it is rare for a business owner to attempt to draft one without legal assistance. One of the main reasons for this is that unsuitable wording can render part or all of the document void. Our courts are relatively strict on NDA contents and hold that uncertain wording is unenforceable against another party. With the time and effort of negotiating an NDA, ensure that yours does not fail due to poor drafting.
2. Setting Out Limits on Confidential Information Use
Some businesses pursue legal action against other parties for confidential information misuse due to incidental or non-malicious disclosure. This is usually because the other party did not respect the expectations and boundaries expected by the company concerned.
An NDA should clearly and concisely outline what the other party can do with your information. Thus, in the case of uncertainty, the other individual or organisation has a legally enforceable contract to review.
In essence, it is difficult for a party to argue uncertainty after signing an NDA outlining the limits of confidential information.
3. Maximum Deterrent Factor of NDA
Often, businesses and individuals are more likely to acknowledge a legal document sent by a lawyer than the same document sent by a business owner. This is because there is an inherent acknowledgement that the lawyer is sending a tightly worded document. Furthermore, this same lawyer will most likely be in touch in the future in case of any breach.
In contrast, if a company provides a weakly-worded document directly and it is evident that a lawyer has not had any input, the other party may suspect it will be unenforceable. The other party may also assume your business is unlikely to spend the money on obtaining legal advice in the event of a breach if they did not wish to incur legal costs drafting the document in the first place.
Key Takeaways
It is safe to say that using non-disclosure agreements can help your organisation guard against the unauthorised use of confidential information. Engaging a lawyer to draft such a document is also a good way of receiving advice on enforcing the document. Knowing the likely result and cost of legal action in the event of a future breach can give your company the confidence to rely upon the document’s terms and challenge any violation.
If you need help drafting and negotiating non-disclosure agreements, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Yes, one main type is a mutual NDA and the other a one-way NDA. A mutual NDA is a document wherein both parties agree to keep each other’s protected information safe, whereas a one-way NDA simply protects one party’s confidential information.
Some organisations and individuals routinely refuse to sign NDAs, while others just need gentle persuasion. If they refuse to sign, you should weigh the pros of working with them against the potential risk of misusing your business’s confidential information.
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