The world is full of trade secrets, industry confidences and other information that shouldn’t get out to the general public. This is not because the information is illegal, but because it is proprietary and protected by common interests and intellectual property laws. This is why NDAs, or non-disclosure agreements, are a standard practice for most businesses, especially during the hiring period. As a business owner, you want to be very careful when drafting a non-disclosure agreement. You could wind up making a fatal mistake that could make the entire agreement inadmissible, which could cause employees to blab. Here are five things to consider when drafting a non-disclosure agreement.
- Do you really need a non-disclosure agreement? Many people rush into creating a non-disclosure agreement and wind up paying a fortune for notarizing, hiring a lawyer and filing. In some cases, you may be jumping the gun. For instance, if you are looking to hire a consultant for a particular project, but the patent isn’t fully flushed out, you may not need this type of agreement – not all the information is there, so you have nothing to protect. So, make sure that you have a reason before you go through the process of drafting an NDA.
- Do you need a broad NDA or a specific NDA that covers a single piece of information or trade secret? Some businesses and individuals like to create a sweeping NDA – it covers everything that goes on inside a particular place or business or institution. The agreement basically states that whatever is heard or seen inside cannot make its way outside. However, you may only need an NDA for a single floor or region of your business, like the research and development sector.
- Do you need a particular NDA for the state in which you live? If you research “non-disclosure Texas,” you will find totally different information than if you searched “non-disclosure California.” Knowing what the laws and regulations are in your state is important, because you don’t want your NDA to become inadmissible, which would mean that much of the information that people learn inside your business is not protected at all. It may also be smart to consult with a lawyer, because the Internet may not tell you everything you need to know.
- Do you need to explain how certain information can be used? Some NDAs are merely a guideline for how information can be synthesized or relayed. For instance, if you work for a business that sells cookies and the company uses a very secret recipe, you may only be allowed to discuss the basic ingredients, like sugar and eggs – talking about the secret recipe could get you in trouble.
- Do you need to be clear about the repercussions? In some cases, you may want to include some of the consequences for breaching the contract. You could explain that if a certain employee releases information, termination will be immediate. You could also include legal actions as well – monetary damage, docked pay, docked pensions and more. In the end, an NDA has to protect your entire business, so you have to get tough.