Thinking only big corporations need non-disclosure agreements is like thinking only super-rich people need estate planning. It’s just wrong. While it’s true that a larger company’s confidential information might be more vulnerable, it’s kind of a numbers game. They are more vulnerable simply because they have more exposure. However, it only takes one person to damage your company through misuse of company information. Read on to learn more about what a non-disclosure agreement can do for you.

First, What Is a Non-Disclosure Agreement?

It’s a legal document that protects confidential information from being used or disclosed in any way. In general, a non-disclosure agreement, or NDA, may include the following information:

  • The names of the parties who are disclosing information,
  • The names of the parties who are receiving that information,
  • A definition of what is being protected,
  • Guidance on how the information is to be protected, and
  • Penalties for misuse of the information.

For example, Anniston XYZ Ltd. maintains confidential client lists, production information, research and development reports, and other information the company does not want the general public to have. So, the company has its employees sign an NDA to keep their information from leaking to competitors and others.

When Should a Business Use a Non-Disclosure Agreement?

Actually, a company can use an NDA any time it wants to protect information like:

client lists, training materials, sales materials, research, new product development, manufacturing process, engineering processes, software code, formulas, designs, drawings, blueprints, intellectual property.

Additionally, confidential information is disclosed when management meets with potential investors or buyers. In fact, sometimes all parties involved in a deal or business meeting will divulge proprietary materials. In that case, the parties may sign mutual non-disclosure agreements.

As an example, consider Anniston XYZ’s attempts to find new investors. They scheduled meetings with two interested parties, and one meeting with someone who was looking to merge. Anniston XYZ provided confidential information to the two interested investors after having them sign NDAs. However, the company and its potential partner both offered sensitive materials in the third meeting. Each side signed an NDA protecting the other’s information.

Your Company May Need a Non-Disclosure Agreement

Every business has confidential, proprietary information. A non-disclosure agreement gives your company recourse in the event someone misuses that information.

Attorney Bruce Adams helps clients just like you with their legal needs. For a free consultation with an experienced Alabama attorney, contact us at 256-237-3339. Located in Anniston, we serve clients in Calhoun, Etowah, and St. Clair Counties.