You can’t run a business by keeping everything hidden from the others. There are many instances where businesses need to share their confidential information. However, for safety, many of them make sure that the other party respects the confidential information they provide. One of the effective ways to protect the secret information provided to another party is by using a Non-Disclosure Agreement (NDA). In this blog, we’ll discuss what is a Non-Disclosure Agreement and what are the key elements of NDA. Let’s find out!
Want to get leads and sales? Register now your accounting firm or sell your services at Accounting Firms. It is the UK’s first free comparative website connecting accountants and businesses in a single place!
What are Non-Disclosure Agreements?
NDA is a kind of business contract that is aimed to keep sensitive information secret. It prevents your information from stealing or sharing to others. This agreement can include:
- Intellectual property
- Financial information
- Trade secrets
- Product development details and so on
Upon breaching this contract, legal action can be taken against the party who signed the NDA agreement. Sharing the confidential information mentioned in a contract can levy heavy penalties and fines.
Key Elements Of Non-Disclosure Agreement
Bear in mind that every NDA is unique as per the business type and nature. However, most of them share common elements that are available in all. Here are the key elements of an NDA:
Confidential Information
An NDA deals with confidential information. The parties of the NDA may agree that the information they are dealing with is confidential. The party that makes an NDA may describe what confidential information is. It can be anything from intellectual information, the proprietary information or secrets of a business.
Requirements And Obligations Of The Parties
An NDA should clearly entail the requirements and obligations that parties need to follow. The party who is signing in the NDA need to secure the information and prevent it from sharing it for any use. Keeping information confidential involves taking reasonable steps to protect information from others’ access. This section of the NDA needs to include that so the party requiring confidentiality can sue for damages in case of a breach.
Time Period
Though some NDAs are indefinite, however, many of them do specify the period. Both parties are required to comply with the NDA rules and the secrecy of the data. In addition, if there is a time period mentioned in an NDA, parties need to understand that the secrecy is enforceable as per the law.
Term Of The Non-Disclosure Agreement
The terms of the agreement need to be clear for both parties. Sometimes the party who issues that agreement wants the terms to be indefinite. However, defining the terms of the agreement is better. Regardless of the agreement between the parties, the term of the agreement should be crystal clear to avoid any misinterpretation, in case of a breach.
Consequence of the Breach
An NDA also needs to entail the results of a breach in writing of the confidential agreement. The consequences may include the end of an employment agreement, liquidated damages, termination of a contract, and payment of any loss or damage done by the party who breached it.
Quick Sum Up
We do hope that you have got a basic understanding of what is a non-disclosure agreement and what are its basic elements. NDA is aimed to keep confidential information secret that can be any intellectual property, financial information or any business secrets. Upon the breach of this agreement legal action can be taken against the party who breaches it.
Get help from our cost-effective, reliable, and experienced professionals at Accounting Firms to boost your profit and cut a ton from your expenses. Register now for free to connect with the professional in under three minutes!
Have a Query? Feel free to get in touch!
Disclaimer: This blog provides general information on NDA.