Every business should protect proprietary information when dealing with independent contractors, vendors and other businesses. The best way to do this is to use a non-disclosure agreement, often referred to as an “NDA.”What is an NDA?
An NDA is an agreement between two parties to protect confidential information disclosed in a business transaction. The proprietary information can include business methods, finances, client lists, and anything that isn’t already readily available in
public arena. If a party subsequently breaches NDA, injured party can sue for damages, an injunction against further disclosure and attorney’s fees.
Directional NDA
In many situations, only one party requires protection provided by an NDA. If you invent a new product, you are going to need an NDA from manufacturers, distributors, etc., before you discuss product with them. While this may seem like common sense, most businesses fail to carry thought through to their daily activities.
Practically every business hires independent contractors, but they rarely obtain NDAs prior to disclosing information to contractors. For example, do you use third parties to create or maintain your websites? Did you obtain NDAs from any of them? If not, what’s to keep that party from using your business methods on other sites? A directional NDA can keep this from occurring.
Mutual NDA
As name suggest, a mutual NDA allows two parties to protect confidential information. The mutual NDA is typically used when two businesses are negotiating a joint venture. Each party must disclose enough information to make negotiations viable, but neither wants that information made public if negotiations fail. If negotiations go well, additional non-disclosure information will be incorporated into joint venture agreement to protect additional information revealed during joint venture.
