In the business world, there are plenty of reasons to share confidential information with other parties. The problem with releasing confidential information is the concern that it may become public or may spread to your competition. The way to ensure that the other party respects that the information is confidential is to have a non-disclosure agreement or an NDA.
You may require an NDA if you present a business idea to a potential partner or if you share marketing and financial information, explains Forbes.
What are NDA formats?
There are two NDA formats: mutual and one-sided formats. In a mutual NDA, both parties share potentially confidential information. Whereas in a one-sided NDA, only one party will share confidential information with the other.
What do NDAs look like?
An NDA does not have to be a long, drawn out document. Most are relatively short when it comes to business contracts. The NDA may only be a few pages long. There are a few elements that you need to have within the agreement, however, to ensure that it is legally binding.
In contract law, any mistake could invalidate the entire agreement. In your non-disclosure agreement, you need to identify both parties involved in the agreement. Likewise, you need to be able to identify the information that needs to remain confidential. You will also outline the terms of the agreement and any exclusions from the confidentiality.
When it comes to the obligation that the other party has towards the confidential information, he or she must take reasonable steps not to release the information. Likewise, the party cannot use the information for their own benefit.