What Does NDA (Non-Disclosure Agreement) Really Mean?

Have you ever told someone a secret and then found out they told someone else even though they promised not to? Unfortunately, I think we’ve all been there, and it’s not fun. That’s why, in business, when you want to share confidential information with someone, you need to cover your back. One of the most common ways to do this is through a Non-Disclosure Agreement, or NDA.

Now, we’re not saying that you need a NDA for every little thing, but there are definitely times when we’d highly recommend it.

So, we believe you should have a NDA when:

1. Showing a new product or business development to a potential buyer

2. Giving employees access to confidential information while they’re working for you

3. Presenting a new design or business concept to someone who may eventually become a partner, distributor, or investor in your business

4. Disclosing matters of marketing tactics, financial standings, and other classified information with a future buyer of your business

5. Acquiring services from a person or company who may have access to confidential information over the course of the time they provide their services

What you need to know about NDAs doesn’t end there. It’s important to note that two kinds of NDAs exist: Mutual and Non-Mutual. We’re going to break it down for you so you can figure out exactly which NDA you need.

A Mutual NDA is for instances where both parties believe they will each be sharing confidential information at one time or another. A Non-Mutual NDA should be created when you believe only one side of the party will be sharing confidential information with the other side.

So, now that you have a better understanding of Mutual and Non-Mutual NDAs, it’s important to make sure that this specific list of items is included in your NDA:

1. The Parties — who is in on this agreement? State the disclosing party or parties in this section of the agreement.

2. Length of the Agreement — how long will your NDA last? Whether you believe it should last forever or only for some specified amount of time, this is the place where the parties agree on a term and put it into writing.

3. The Breadth of the Agreement — how many people does this NDA cover? Just the main recipient? The recipient and a small handful of his or her colleagues? Regardless of your decision, make sure whoever has access to your confidential material is informed of and understands the NDA.

4. The Definition of Confidential — what do you consider to be confidential information? Maybe you think only written information is confidential, or perhaps you’re more concerned with protecting the information you share verbally. You can choose to protect just one or all forms of information — the choice is yours. Just be sure to be specific about what you want to protect.

5. NDA Exclusions — which pieces of information can be deemed as exclusions from the NDA? NDAs typically include certain exclusions in the event that the confidential information becomes too unfair or troublesome for the receiving party to keep to themselves.