Are NDAs important for Small Businesses?
Confidentiality Agreements, or Non-Disclosure Agreements (NDAs) as it is more commonly known, are important to businesses big or small.
NDAs are legally-binding Confidentiality Agreements or contracts that highlight information that should be kept confidential when an organisation enters into business with a different party.
With the economy growing so fast, there is a remarkable increase in the number of employees. And because of the increasing number of employees year after year, there is an urgent need for businesses to protect their trade secrets. The main purpose for any Confidentiality Agreement is to ensure that the parties involved sign an agreement asserting that they will not misuse the trade secrets for their own personal gains.
Therefore, regardless of big or small, a business should have such agreements, especially when discussing plans for the business, implementing unique techniques and procedures, etc. In any case, disclosure of the trade secrets by any of the parties could lead to prosecution.
Who prepares NDAs?
Generally, NDAs are prepared by the Human Resource Department or the company’s corporate lawyer. If you do not have a business lawyer, do not panic. Most contract drafting organisations will be more than happy to draft an agreement contract for you if you get in touch with them.
What you must understand, though, is that an NDA does not state the nature of information that should be protected but rather protects any kind of detail that is trade secret. For instance, an NDA can contain details of a chemical formula used to make a specific product. Signing such an agreement would mean that the other parties will not by any chance disclose the information to any other person in the competitive scope.
Therefore, for as long as the other party signs the agreement, a business is assured that no trade secrets, details, plans or implementations will be leaked to its competitors. It is also up to the organisation or company creating the NDA to decide when, where, and how the other parties can pass some of that information and to who.
When is an NDA necessary?
When introducing a new product – when a new product is introduced, the first thing the company looks for is a good advertising agency to push the product to the market, right? Well, as the organisation introducing the new product, you should enter into a Confidentiality Agreement with the advertising agency stating that no details about the new product will be passed to the competitors.
Learn more: Essential clauses in an NDA
An NDA is also important when purchasing franchise rights, especially if you are buying from a renowned brand, or licensing rights.
In conclusion, irrespective of your business size, if you have some trade secrets that are worth protecting, (please) get a Non-Disclosure Agreement. If you can’t do it yourself, hire a lawyer or use trustworthy solutions that can help you draft an agreement.
This a guest contribution submitted by Bill Williams. The views expressed here are of the author’s, and Zegal may not necessarily subscribe to them. You, too, are invited to share your point of view! Learn more about guest blogging for Zegal here.
Bill is a professional legal consultant who works at a local contract drafting agency. To learn more about NDAs, please visit their site.