Nondisclosure agreements (NDAs) are important tools in the business world. They can allow you to explore new business ventures, bring new employees or contractors on board, or seek investments, all without fear that the “secret sauce” that makes your business what it is will be jeopardized.
But just saying something is secret, or perhaps worse, getting some stock NDA off the internet, is a recipe for trouble. The things and secrets you’re trying to protect are too valuable for that. Drafting a rock solid, enforceable NDA is more than just a form contract, and there are things in NDAs that should be there to ensure that they are as solid and protective as you intend them to be.
Read on as our Chicago business litigation lawyer at Ellis Legal explains more.
What is Protected? Be as Specific as Possible
Often, an NDA will state that it protects “all information” or some general, all-encompassing term like that. But that’s a mistake; while NDAs are enforceable, many courts do want to know exactly what is being protected—and “all information” is so broad that many courts will say it really protects nothing at all.
There is, of course, a balance—you don’t want to exactly list that which is supposed to be private and confidential; in the event, you have to enforce the agreement, the NDA would be filed in court and part of the public records. But you also need to have some way of identifying what it is that is supposed to be confidential.
You Still Need Consideration
NDAs can be one sided, but they do need consideration. Someone has to get something, or give something up, in return for agreeing to the NDA. If someone is getting a job or an opportunity, or something of benefit for agreeing to the NDA, the agreement should state that. This is often a problem with current employees; many companies make them sign NDAs, but don’t give them any extra benefits for doing so.
How and When the Information Can be Used
Setting the rules for accessing and using confidential information is important. Even though you’re granting access to your confidential information, that doesn’t mean someone can use that information all the time or for any purpose.
Yes, your NDA will allow someone else to use, access or review the information that is private or confidential. But how can they use it? For what purpose? For how long? Is there a way that they can and cannot access that information?
Returning the Information
How will the confidential information be returned to you when access is no longer needed? If access is for a one-time purpose, like doing due diligence on a business purpose, if the transaction never happens, your NDA should say how confidential information is returned to you—and that any information the other side does access should be destroyed if it cannot be returned.
One way you can help with this problem is by setting up a separate email account for the project you are working on. That way, if need be at the conclusion of whatever you are doing, you can just access the accounts to make sure electronic data like emails are destroyed.
Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 to help protect your business and it’s confidential information.