Protect Your Business With NDA
Richard A. Chapo.
Every business should protect proprietary information when dealing with independent
contractors, vendors and other businesses.
What is an NDA?
An NDA is an agreement between two parties to protect confidential information
disclosed in a business transaction. The proprietary information can include business
methods, finances, client lists, and anything that isn’t already readily available in the
public arena. If a party subsequently breaches the NDA, the injured party can sue for
damages, an injunction against further disclosure and attorney’s fees.
Directional NDA
In many situations, only one party requires the protection provided by an NDA. If you
invent a new product, you are going to need an NDA from manufacturers, distributors,
etc., before you discuss the product with them.
Practically every business hires independent contractors, but they rarely obtain NDAs
prior to disclosing information to the contractors. If not, what’s to keep that party
from using your business methods on other sites? A directional NDA can keep this
from occurring.
Mutual NDA
As the name suggest, a mutual NDA allows two parties to protect confidential
information. The mutual NDA is typically used when two businesses are negotiating a
joint venture. Each party must disclose enough information to make the negotiations
viable, but neither wants that information made public if the negotiations fail. If
negotiations go well, additional non-disclosure information will be incorporated into
the joint venture agreement to protect additional information revealed during the joint
venture.
Refusing to Sign an NDA
Alarms and warning lights should go off if a party refuses to sign your NDA. Unless
they can provide a very compelling reason for the refusal, you should walk away from
the business relationship.
When An NDA isn’t really an NDA
The waiver might be very direct and read something like, “The disclosure of
information pursuant to this Agreement shall not be considered confidential.”
Alternatively, the language may be more indirect and read, “The parties acknowledge
and agree that all information exchanged pursuant to this agreement has previously
been established in public forums.” Regardless, the “reverse NDAs” strip you of
protection and should not be signed.
Obtaining non-disclosure agreements should be a standard practice for your business.
Don’t exposure your proprietary business secrets to others without this protection.
Richard A. Chapo is with SanDiegoBusinessLawFirm.com - This article is for
information purposes only. Nothing in this article is intended to address the reader’s
specific situation nor does it create an attorney-client relationship.