NDA – The beginning of every relationship
Let’s break it down and make it simple: An NDA is a legally binding agreement between two or more parties that places an obligation on the recipient(s) to keep confidential information a secret.
You have two types of NDA’s: one-way and mutual.
👉 In a one-way NDA, one party discloses secret information to another, and the receiving party is under a legal obligation to keep that information preserved until the confidentiality period is up.
👉 A mutual NDA works both ways. Information is shared on a two-way street, so both parties have a duty to keep each other’s secrets and an obligation to not spill the beans.
Why do you need an NDA?
The bottom line is that you only need it for one reason: to protect your confidential information. Only by signing a legally binding NDA can you assure that the secret information you share with other parties will be fully protected and enforceable.
You have come along way building your business. However, you will need advisors, partners, suppliers and investors, and to conduct those business and negotiations you will have to share some sensitive information about your product or service, like intellectual property.
Of course, you worry that the information could be leaked or misused. This is the moment when you should consider an NDA. It should always be your top priority when starting a new relationship with third parties.
What elements should you place in an NDA?
- A precise definition of what is considered confidential under the agreement .
- The clear reason as to why the information is shared and for what purpose.
- An elaborated explanation as to how the shared information can and cannot be used.
- Explicit information about the timeframe or the duration of the agreement.