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Protect your secrets with non-disclosure agreements.

A Nondisclosure Agreement (or Confidentiality Agreement) is a fairly straightforward agreement that should be used when sharing confidential information about your small business with other parties. Not only does it provide rights against the person who signs it, it shows that your small business is using efforts to protect your confidential information making it more likely that your confidential information will be protected in the future as trade secrets or some other protection. Items that need protecting include business plans, strategic plans, financial plans, customer lists, know-how, manufacturing processes, inventions and other trade secrets.

Important Tip Employment agreements and protections are always best when they are entered into at the time an employee starts working for the small business - not later and especially not when they have already threatened to leave

Key Parts

The key parts of a Nondisclosure Agreement (or Confidentiality Agreement) are the following — the parties may be referred to as the receiving party and the disclosing party):

Description of Information. A broad description of the type of information that is covered, including such things as proprietary ideas, patentable ideas, copyrights and/or trade secrets, existing and/or contemplated products and services, software, schematics, research and development, production, costs, profit and margin information, finances and financial projections, manufacturing processes, customers, clients, marketing, and current or future business plans and models

Limits on Right to Use. A limited right to use so that the receiving party can use it to evaluate a loan, or design a website for the small business or perform other services. It usually allows the information to be shared with other key employees of the receiving party who are also involved in the services.

Exceptions. There are usually four generally accepted exceptions to confidentiality that relate to (i) information already known by the receiving party, (ii) information that later becomes public through no fault of the receiving party, (iii) is otherwise received by the receiving party from someone else not bound by confidentiality to the disclosing party and (iv) information that is independently developed by the receiving party.

Protection from Lawsuits. There are usually provisions that allow the disclosing party to get involved if the receiving party is obligated to disclose the confidential information in a lawsuit or other judicial proceeding.

No Warranty. There is usually a no warranty provision to protect the disclosing party if any of the information turns out to be incorrect.

Additional Information
Important Tip: 
Employment agreements and protections are always best when they are entered into at the time an employee starts working for the small business - not later and especially not when they have already threatened to leave
Marketing copy: 
Protecting your Business