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What should you include in an NDA?

On Behalf of | Dec 8, 2023 | Business Law |

In today’s business landscape, safeguarding sensitive information is very important. One indispensable tool associated with business contracts is the non-disclosure agreement.

To ensure your NDA offers ample protection, you must include certain elements. A well-crafted NDA is also more likely to be enforceable, thereby avoiding time-consuming contract disputes.

Introduction and definitions

Begin your NDA with a concise introduction that identifies the parties involved. Be sure to define terms such as the “disclosing party” sharing information and the “receiving party” receiving the information. This sets the stage for a clear understanding of roles.

Scope of confidential information

Be specific about what the agreement covers, including trade secrets, financial data or any proprietary processes. This section leaves no room for ambiguity, ensuring both parties are on the same page about the nature of confidential information.

Obligations of the receiving party

An NDA must also articulate the obligations of the receiving party. This includes language prohibiting disclosing, reproducing or using confidential information for personal gain. By outlining these restrictions, the NDA becomes a powerful deterrent against unauthorized sharing.

Permitted disclosures

In certain situations, disclosure may be necessary, such as when required by law or court order. Clearly outline these exceptions to prevent misunderstandings and legal complications down the road. This ensures that the NDA does not obstruct compliance with legal obligations.

Duration of confidentiality obligations

You must also specify the timeframe for which the confidentiality obligations will apply. Whether it is a set number of years or until a certain event occurs, defining the duration allows for a natural end to confidentiality obligations.

Return or destruction of information

Upon the termination of the agreement, contract language must require the receiving party to return or destroy all confidential information. This minimizes the risk of accidental disclosures or misuse of information.

Miscellaneous provisions

Include miscellaneous provisions such as governing law, dispute resolution options and any additional terms that are relevant to the specific agreement. These provisions add an extra layer of clarity and prevent potential conflicts.

Among the 33,185,550 small businesses currently operating in the U.S., as reported by the U.S. Small Business Administration, many use NDAs to protect their interests against competitors. By crafting a solid and legally binding agreement, business owners can achieve substantial peace of mind.


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