Now that you have set-up the partnership with your new partner(s) and drafted up the partnership agreement. It is time to begin business, so you think. But, you must ensure that along with the partnership agreement that you do another agreement to protect every aspect of your business. You not only have to protect your personal assets from potential liability, but you must also protect your business ideas, marketing brand, and marketing ideas. The best way to protect your ideas and brands is by way of a Non-Disclosure Agreement.
What is a Non-Disclosure Agreement?
- It is a confidential agreement between partners.
- The non-disclosure agreement is also known as NDA.
- The NDA protects privileged and confidential information between the partners.
- These legal contracts are used to ensure that associates with whom business owners share critical information aren’t able to use that information for themselves or share it with others. Source: http://www.businessnewsdaily.com/4760-non-disclosure-agreement.html
- According to the Small Business Administration, non-disclosure agreements can cover any information, knowledge or materials that are not publically or typically known. Source: http://www.businessnewsdaily.com/4760-non-disclosure-agreement.html
- They are typically used when two or more businesses or individuals are conducting business together and confidential information is being exchanged. Source: http://www.businessnewsdaily.com/4760-non-disclosure-agreement.html
What are other names for Non-Disclosure Agreements?
- Confidentiality Agreement
- Confidential Disclosure Agreement
- Proprietary Disclosure Agreement
What are the main types of Non-Disclosure Agreements?
- Unilateral Non-Disclosure Agreement: where a business will share certain data or information regarding the business with a third party like an independent contractor. The agreement ensures that the independent contractor does not steal any important viable information from the business. This agreement ensures that the independent contractor does not take important data or information of the business and pass along to one’s competition. This type of NDA is also used when a company is being sold to another company and allows the seller to share certain information with potential buyers.
- Mutual Non-Disclosure Agreement: These types of NDA are normally involved when two businesses want to work together by way of a joint venture. These agreement allows the two companies to continue to work together without the fear of losing propriety information with respect to each other’s business. This ensures that each business understands that they cannot steal each other’s propriety information.
What are the main components of the Non-Disclosure Agreement?
- Information to be protected: Provide specifics on what data and information of one’s business will be protected. This sets the rules and guidelines of what information shall be protected and what information shall be shared.
- Details on the time frame of the NDA: The agreement should set-up how long it shall last. Also, states how long the information and data shall be privileged and confidential. The agreement can last for an indefinite period of time. Normally, last no more than 10 years.
- Details regarding what will happen if there is a breach of the NDA: The agreement should provide information on what will happen if the NDA is breached and what damages will be collected. It should also state whether or not arbitration/mediation will be used before one can sue in court.
It is advisable to have an attorney or business consultant assist one with the drafting of Non-Disclosure Agreement. Also, good to have an attorney review the Non-Disclosure Agreement before signing one. A Non-Disclosure Agreement will protect one’s propriety information when doing business with others.
Donya Zimmerman is a business consultant, mediator, and legal professional with over ten years of experience. She is owner of Family & Community Mediation and Business Consulting (FACMBC) based in Baltimore, Maryland and has been in business since 2013. Services provided by FACMBC: Mediation and Conflict Resolution Services; Business Registration Assistance (Limited Liability Company, Corporation, S-Corp, Limited Liability Partnership, etc.); Business Plan Drafting Assistance; Business Certification Assistance (MBE, WOSB, 8A, 501(c) (3), Hub Zone, etc.); and Business Organization Assistance. She is also a contributing writer to the Maryland Daily Examiner Newspaper. Contact information: firstname.lastname@example.org; www.facebook.com/FACMBC; www.twitter.com/FACMBC; https://dzimmerman36.wordpress.com; http://www.linkedin.com/in/dzbusconsultantandmediator