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Do I Need An NDA To Protect My Business?

Posted on March 17, 2020

A non-disclosure agreement (NDA) is a useful level of protection for information or intellectual property (IP) that is confidential and sensitive to an organization. 

An NDA can prevent important information from getting into the wrong hands and being used to negatively affect your company in the way of reduced profit or revenue, or damage to your reputation. 

When To Use An NDA

NDAs can and should be utilized whenever outside parties are getting involved in your business and will have access to any kind of sensitive material. 

This could be on an ad-hoc or ongoing basis, for example;

  • Negotiating deals with new suppliers or circulating procurement tenders;
  • Prior to discussing potential business mergers, acquisitions, and new partnerships;
  • As part of your standard employment contract for permanent employees;
  • As an agreement with freelancers or contractors to the business.

This list is by no means exhaustive and you should also consider whether an agreement needs to be reciprocal and bind both parties to its terms or can be signed by one party only.

Are all NDAs enforceable?

In short, no. If an NDA is written with any ambiguity, it may be deemed unfit for purpose and as such will be difficult to enforce. A poorly constructed document can be left open to interpretation but there are measures you can take to ensure its quality.

Ensure All Confidential Information Is Included

Think about all of the information you want the agreement to cover, in what form it constitutes confidential (written, verbal, electronic) and then consider limiting the scope of the terms so that it’s not overly broad.

Don’t Make Excessive Demands

If your contract makes too many demands and those demands are completely unreasonable for a person or business to adhere to, then it may not be enforceable. A good NDA should be both balanced and fair.

Establish Internal Standards For Dealing with Sensitive Information

If you don’t have procedures in place to say ‘who’ and ‘how’ information can be accessed internally, it will be hard to prove the source of a breach. In such cases the data will be devalued, will no longer be considered confidential and any NDA protecting it can be rendered invalid.

Check Accuracy of Legal Names

Exercise due diligence in determining the correct name to go on your contracts. Is there a legal name for the business that differs from the trading name? Make sure not to invalidate an NDA by making incorrect references.

NDAs are still a crucial way to protect the unique ideas and knowledge that make businesses successful, however, they need to be well written and justifiable.

If in doubt, seek professional legal advice:

You probably won’t know whether an NDA has adequately protected your business until such a time as there is an issue that requires you to broach the terms with the other party, or you need to try and enforce the agreement.

NDAs need to be comprehensively prepared and reviewed with care to protect all the parties involved from any negative and costly consequences in the future.  

If you need some advice on creating effective Non-Disclosure Agreements for your business, contact our experienced corporate team today and we’ll be more than happy to help.

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