After years of hard work, you’ve launched your own hot sauce company using your grandma’s secret recipe. Business is heating up, and you need to work with a bottling company so you can ramp up production and match demand.
However, the partnership requires you to provide the bottling company with your grandma’s treasured recipe, and you’re worried about your secret recipe getting out. In this scenario, a non-disclosure agreement might be exactly what you need to address your concerns and keep your proprietary information secure.
What Is a Non-Disclosure Agreement?
A non-disclosure agreement (NDA for short) is a legal document you can use to protect private information that you don’t want shared with the general public or competitors. Sometimes, NDAs are also called confidentiality agreements.
Not sure if an NDA fits your situation? Here are three facts to know about implementing an NDA and how these agreements work.
1. An NDA Ensures Confidentiality of Sensitive Information
Non-disclosure agreements protect proprietary information, sensitive data, and trade secrets from getting leaked or spread. These documents outline the information that is to be protected by the NDA signers and the reasons why the information is important.
Suppose you are considering implementing an NDA for your company. In that case, you should be able to clearly articulate what specific information the NDA is supposed to protect and why that information’s secrecy is critical for your business.
2. There Are Several Components to an NDA
The participating parties won’t be able to comply with the NDA if the language is unclear, so it’s important to work with an experienced attorney when creating an NDA. Your NDA will need to specify:
- Specific information protected by the NDA
- The time period covered by the NDA
- What information is not included in the NDA
- Appropriate uses of the information protected by the NDA
- With whom the protected information can be discussed
- Consequences if the NDA is breached
3. There Are Different Types of NDAs
Depending on your situation, you can use different types of NDAs to protect your sensitive information.
- Unilateral NDA: A unilateral NDA is between two parties; one party is disclosing information, and the other party agrees to keep that info private. This is probably the most common type of NDA.
- Bilateral NDA: A bilateral NDA is between two parties who both share information and want to avoid disclosure to outside sources. This type of agreement often comes into play when companies merge.
- Multilateral NDA: A multilateral NDA is between at least three parties, one of whom is disclosing information that the other parties must keep private. This NDA is suitable for businesses who are working on sensitive projects with multiple vendors.
While you can find NDA templates online, these templates are often too generic and vague to work well. A good NDA will address your specific needs and use careful, thorough language to outline the protected information and the reasons for its secrecy. If you want your NDA done right, it’s best to work with an experienced attorney.
Need to Protect Your Company’s Information With an NDA? Work With an Experienced Michigan Business Attorney
At the Law Office of Kari Santana, we have more than 10 years of experience helping West Michigan businesses like yours create and implement NDAs. If you think you may need an NDA but aren’t sure how to get started, call Kari Santana. She can meet with you personally to learn about your unique situation and then create a customized document that protects your sensitive information.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.