Non-Disclosure Agreements (NDAs)

Non-disclosure agreements, or NDAs, are cost-effective and generally short-form legal documents that establish confidentiality in business or other relationships. NDAs serve as an agreement that sensitive information will not be made available to others. The language in these documents can clarify specifically what must be kept a secret and outlines the potential consequences should there be a breach of contract. Because startups and similar companies rely heavily on their trade secrets and other IP, having strong NDAs is a key to success.

NDAs are common for businesses entering negotiations with other businesses as they allow parties to share information without fear that it will end up in the hands of competitors or out in the public domain. Typically, parties are classified as “discloser” or “receiver” parties, and it is vital that each “receiver” party signs an NDA. When only one party will be disclosing confidential information, the other party may sign a “one-way” NDA which represents that it will be bound by the terms of the NDA. When both parties will be disclosing such information, the parties typically sign a “mutual” NDA which applies the obligations of the NDA to each party.

NDAs can also typically be found in employment documents for employees who come into contact with their employer’s confidential information. For many startups and new businesses, all employees sign, because employees in early stage companies often have access to wide ranges of company information, including confidential information.

When considering the use of an NDA, startups may wish to consult with a startup lawyer who can assist with drafting or review of NDAs.