Had such a document been produced by the Winklevoss brothers whilst Mark Zuckerberg was lending his skills to their website, the face of social networking could be very different today.
Of course this is an infamous case but it still has the utmost relevance for businesses across the UK today who are constantly creating and sharing ideas and information.
What is an NDA?
An NDA is a legally binding document that is the first step to protecting your ideas and intellectual property when sharing valuable and confidential information with others (individuals and businesses). It is the easiest and most common way of ensuring that this information is not compromised, made public or exploited in any way. It also means that in the eventuality of any breach of contract, you can take legal action to implement any solution needed to rectify or prevent further breaches and recover damages.
Why do you need an NDA?
You may have a brilliant business or creative idea along with the strategy on how it will be brought to market or implemented; you may also have important business plans, marketing information or financials and statistics that are at the crux of your business. At some point you will need to share some of this information with others to help further the growth of your company, be they internal employees or external consultants and contractors, but you do not wish for such valuable information to be made public or fall into the wrong hands. An NDA will allow you to discuss this confidential information openly with those you choose without fear of it later being misused or shared without your authorisation.
Which type of NDA do you need?
If only you are sharing information, use a One-Way Confidentiality Agreement to protect your intellectual property. This should cover the terms under which the confidential information can be used, who is allowed to receive the information, the restrictions placed on it to maintain its confidentiality, as well as remedies and damages should there be a breach of contract.
If both parties are exchanging sensitive information, use a Mutual Confidentiality Agreement which covers all the above but also ensures that both parties are fully protected. An NDA like this allows you to get to know each other better so you can decide whether to enter into a longer-term deal or partnership.
When you first start sharing information, or if you frequently do so, and quickly need to agree an NDA to protect your information, use a Letter of Confidentiality. This document provides the same level of protection but is ideal for less formal situations or when time is of the essence.
Where do you go to create a NDA?
It’s important that you have confidence in your confidentiality agreement and that it has been properly drafted – if not, you are putting your business at risk. Always create a tailored agreement to fit the specific needs of your business, that way you ensure all aspects of your confidential information is protected, leaving nothing to chance.
Drafted carefully and dutifully signed off by the relevant parties, the NDA is the first and single most effective legal document there is to protect the interests of your startup or small business. Protect it before you share it.
Mark Edwards is general manager at online legal service Rocket Lawyer
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