ALL ABOUT NON DISCLOSURE AGREEMENT: WHAT IS IT AND HOW DOES IT WORK?

ALL ABOUT NON DISCLOSURE AGREEMENT: WHAT IS IT AND HOW DOES IT WORK?

Introduction

Confidentiality is a very important feature in any relationship. Be it in friendship or in business, confidentiality is must. It is this confidentiality that builds trust and make people work together. Confidentiality plays a major role in protecting the sensible information of different organizations from their competitors. Companies try to hide their special recipe in order to make them stand out of the crowd and stay unique. Each company tries their level best to be the best in the market. So in order to be unique it is necessary to hide the working dynamics of the company.

To do this companies often take help of written statements. When in need, these written documents help in their case. One such written document is the non disclosure agreement that is being made between the owner and the employees.

What is an NDA?

Non-disclosure agreement or commonly known as NDA is a legal contract that establishes confidentiality and trust between two parties. These parties usually include the owner of the protected information and the recipient of that protected information. This agreement when signed ensures that the recipient cannot share this information to any other people or in business world known as the third parties. According to this non disclosure agreement one cannot do the following things:

1. The recipient cannot share the information mentioned in the non disclosure agreement to the third parties.
2. The recipient cannot release the information to the outside people.
3. The recipient cannot copy this information and send it to any other person.
4. The recipient is not supposed to modify or alter the information mentioned in the non disclosure agreement.
5. The recipient cannot make use of any of the information in any way.

Since non disclosure agreement is a legal agreement that enforces and ensures that the confidentiality exists between both the parties, it is also very important to know how this non disclosure agreement works. Therefore it is always advised to know about this agreement before signing it because of the legal implication it could further have in future.

Non disclosure agreement can also be known as various other names such as confidentiality agreement, confidential disclosure agreement, secrecy agreement, proprietary information agreement and non disparagement agreement.

How many types of non disclosure agreements are there and where are they seen?

According to the type of information and the number of people involved, non disclosure agreements are being classified. Since there are moments in a huge organization or a company where the owner requires involving several number of employees and even other organizations, non disclosure agreements also vary accordingly.

Non disclosure agreements are usually classified into three categories. These are:

• Unilateral:

It is commonly known as one way non disclosure agreement. Here there exist two parties where only one party discloses information to the other party mention the reason why this information should be maintained with secrecy. These are usually seen in the field of trades and news announcements.

• Bilateral:

This type of non disclosure agreement is also known as two way non disclosure agreement or mutual non disclosure agreement. Here there also exist two parties but the only difference is that both the parties share information with each other and intends for the proper protection of each other’s information. These are usually seen in the business domains where there are some joint plans or collaborations.

• Multilateral:

In this type of non disclosure agreement, there exist three or more parties where at least one party discloses the information and the rest protect them. In many cases there may be more than one party who discloses the information.

Where can we include a non disclosure agreement?

It is worth noting that a non disclosure agreement finds its role in many other spheres of life. Since this is a confidentiality agreement many enforces this in their companies and ensures their non disclosure.

Some of the fields where non disclosure agreement is frequently done:

1. Business domain:

When a non disclosure agreement is discussed it is no wonder that business companies would be highly benefited through these types of agreements. Since business is a huge domain, it is not so surprising that the competition is high as well. Often other companies try to hire good employees from other companies and try to extort important information. These kinds of non disclosure agreements help companies to maintain their secrecy.

1. Planning and architecture:

Another major field where non disclosure agreements are used is in architecture. Different firms take up different works and they make different plans for the designs. To maintain the originality of the design architectural firms introduce such kind of agreements amongst their employees.

1. Research:

This is the era of new technologies. Several countries are doing research on several aspects. For the research to not go out of the research team or the organization, a non disclosure or confidentiality agreement is introduced.

1. Medical research:

As the world is looking forward for weaponry advancement, there is another sector where everyday lots and lots of research is taking place and that is the medical field. Everyday new medicines and anti viruses are developed. Since these are very sensitive information these required to be protected. Therefore medical institutes and research institutes often use this non disclosure agreement to their benefit.

1. News reports:

News channels have one motto and that is to give news to people first. The news channels often have higher competition in their field because people would love to watch only those channels who would give them the news first. Non disclosure agreement in this case ensures that the reporter would not share the news to other news agents. There are several cases where news are mishandled or are given away to other companies. Non disclosure agreement in this situation gives them a

1. Judiciary:

Non disclosure agreement plays a huge role in law and judiciary system. There should be absolute confidentiality between the client and the lawyer in order to protect the details about the client as well as the case of the client. To ensure this protection a non disclosure agreement is must.

1. Industries:

On the onset of new technologies, industries are investing heavily in research and development sector. Since these researches are heavily invested and therefore require protection. Here a non disclosure agreement is enforced to ensure that

1. Financial:

Non disclosure agreement finds its role in financial matter as well. There are several situations where a non disclosure agreement is used where money or property is involved.

Purpose of a non disclosure agreement

There occur a lot of problems in the world of business and without a non disclosure agreement there may be a chance for your information to be disclosed to the public. There may be a chance of the information to get shared or used by employees or clients.

Due to these problems, a confidentiality agreement is enforced. The purposes of a non disclosure agreement are as follows:

1. Protect sensitive information of the companies:

Signing the non disclosure agreement, a client or the participant gives his / her promise that they are not going to share this information with anybody who is not involved. According to this agreement if the participant is found to be indulging in sharing the information he / she will be punishable.

1. Protect the development of the products:

Since there are development of products and new inventions, it is very important to keep them in confidential states. Many third parties try to extort this information and use it for their own benefits. Non disclosure agreements ensure that this does not happen and if happened then strict actions are taken.

1. Classification  of public and private information:

A non disclosure agreement helps on classifying information from public information and private information. There is much information which the companies or the organizations do not want to be public. They do not want to fully announce their goals or targets. These are some of the information that the companies do not want to share. A non disclosure agreement thus makes the employees understand about the information that are to be shared or not shared. This agreement draws a clear line between private and public information.

Things to write in a non disclosure agreement

It is often noticed and observed that people know about the non disclosure agreement and their usage but they often face a dilemma in what to write.

Each company has its own set of rules that they follow. According to these rules they can customize their non disclosure agreements. But listed below are some of the things that one can include in their non disclosure or widely known as confidentiality agreement.

1. Name of the parties included in the agreement

Mention the complete names of the people involved in this non disclosure contract.

2. Information details that are to be included in the agreement.

Complete details of the information that is to be protected should be mentioned clearly by the owner. This will serve as a guideline for the employee.

3. Details of why this particular information is to be maintained as a confidential agreement.

Details about the information should be completely written down and explained about the nature of this information. Importance of this information should be noted down properly.

4. Time frame of the confidential agreement. One can also mention the time period for the non disclosure agreement to be valid. People usually mention the time limit so as to make the document more protective.

What would happen if non disclosure agreement is breached?

Non disclosure agreement is a written document that is made for the protection of sensible information which is important for that company and can harm them if the information is released. To make this document a fully protected one, many companies bind some legality in this document. This includes paying fine for the non disclosure or even being jailed. Different companies have different ways of handling the situation based on their companies’ morale and motto.

But before giving any harsh punishment it is absolutely necessary to understand the surrounding during the disclosure. It is important to note down how the disclosure of the information happened and who know about the information now. After going through these the owner would decide which kind of punishments would be suitable to be given to the employees.

Conclusion

In this world of advancement and competition, there are several things that needed to be protected. Be it the advancement in technologies or the targets of a company, it is absolutely necessary to make this information fully protected. To protect this sensitive information, companies and organization often take help of the non disclosure agreement. A non disclosure agreement is a written document that specifies which information is being protected and between whom. This helps the organization in maintaining their privacy and also informing their employees about information that are to be kept private. There are basically tree types of non disclosure agreements namely unilateral, bilateral and multilateral non disclosure agreements that tells us about the parties involved.

Since non disclosure agreements are written documents, specification such as name of the employees, details about the information and time limitation are written. This makes the recipient of the information understand about the gravity of the information. This make them understand what kind of privacy the information should have.

Non disclosure agreement finds its role in various fields such as medical, research, financial, judiciary and business. Non disclosure agreement has been widely used in various fields due to its profound importance.

Many non disclosure agreements are customized according to the needs of the company. These are customized by seeing the importance of the information and it’s after effects if it is disclosed. Many companies and organizations often bind this agreement with law ensuring its full proof protection.

So this was all about the non disclosure agreement. Hope this article helped you in understanding about this important agreement that many companies opt for. Stay tuned with us for more such contents.