What You Should Know About Non-Disclosure Agreements
In my practice as a business law attorney, I am regularly asked by my clients about ways that they can protect their businesses. While there are many different strategies that could be used to afford your company various levels of protection, one of the more common ways is the use of non-disclosure agreements or NDAs.
There has always been a bit of confusion in the general population about exactly what the purpose of an NDA is and when to use such an agreement. Non-disclosure agreements, also known as also known as confidentiality agreements, confidential disclosure agreements, proprietary information agreements, or secrecy agreements, can be valuable tools for business owners.
An Unfair Reputation for a Valuable Legal Tool
An NDA is a legal contract that can exist between two or more parties that guides how confidential information should be kept private. For example, if two parties wish to discuss sensitive material without the threat of that information leaking to a third party, they can use an NDA to establish confidentiality rules. Doctor-patient confidentiality, attorney-client privilege, and bank–client confidentiality are forms of non-disclosure agreements.
Unfortunately, non-disclosure agreements often receive bad press, particularly in controversial matters. For example, it is not uncommon for the terms of a personal injury settlement or a large business deal to be protected by a confidentiality agreement, which may lead to speculation that one side is hiding something inappropriate. The existence of an NDA, however, by no means indicates that any illegal or unethical behavior is being protected.
Scenarios in Which an NDA May Be Useful
Some business owners and entrepreneurs use an NDA to protect sensitive information during the sale or licensing of a product. If someone has created a new technology or product and wishes to prevent a purchaser from using the information about the product against the creator, he or she can ask the potential buyer to sign a non-disclosure agreement about the information he or she learned during the transaction. NDAs can prevent unscrupulous individuals from using the results of your hard work as leverage in other negotiations.
NDAs can also be useful when a business owner wants to ensure that employees will not share private information about contractor and manufacturing agreements, proprietary processes, or clients. For example, if your client has access to personal or financial details about your clients, having your employees sign an NDA prevents them from sharing this information and making you potentially liable.
Business owners who are considering selling their business to another individual or party often use NDAs to protect the information potential investors or buyers will learn about their company. Unfortunately, it can sometimes be difficult to know when a potential buyer is serious and when they are only “fishing” for information. A non-disclosure agreement protects your business’s financial and legal interests.
A DuPage County Business Agreement Lawyer Can Help
If you are a business owner and have further questions regarding non-disclosure agreements or any other business-related agreement, our team is ready and willing to help. Contact an experienced Naperville business law attorney at the Gierach Law Firm to get the answers you need. Call 630-756-1160 for a confidential consultation today.