Every company has its own set of documents or records that are termed as confidential information. This information could include the company’s trade secrets. For example, the secret recipe for a beverage company, the product placement strategy for an upcoming product or the initiation of a joint venture. Whatever maybe the reason, companies tend to hold some piece of information as confidential, in order to maintain their competitive edge in the market.
Business owners take legal help to draft a non-disclosure agreement for parties who are accessing such confidential information, such as employees or third party service providers. A non-disclosure agreement is a legal contract between you and the other party preventing them from disclosing vital information to a third party.
Here are a few instances when your business will require a non-disclosure agreement.
1) When Starting A Joint Venture Project
When you plan on entering into a joint venture, both the concerned parties tend to disclose a lot of confidential information. The disclosure of information is usually for a limited time frame. For example, a few months or a year before the joint venture agreement is signed. This is done so that both parties can analyse the confidential information to decide whether or not to enter into a joint venture with the other company.
2) When Employees have Access to Confidential and Proprietary Information
As a business owner, you would have spent considerable amount of time identifying the best practices that make your company stand out in the market. These practices could include cutting edge operation facilities, unique manufacturing processes, client lists, and supplier and manufacturing agreements. You need to make sure that tomorrow one of your employees does not end up using all this information to come up a with a competing enterprise. And to achieve this, you have to make your employees sign a non-disclosure agreement.
3) When Receiving Services from a Company that has Access to Sensitive Information
Another instance when you would require a non-disclosure agreement is when you work with a company where in you have to exchange email IDs, leads, customer data, etc. Ideally, you should take legal help and get the client to sign a non-disclosure agreement to make sure no sensitive information is misused. In the wake of scandals like that of the Facebook-Cambridge Analytica fiasco, it is important that companies find ways to protect their customer information.
4) When Sharing Business Information with a Prospective Buyer
If and when you decide to sell your business, then you will have to show all your cards to the prospective buyer. This means disclosing confidential information to these buyers. You can opt to make them sign a non-disclosure agreement to ensure your trade secrets are not stolen.
Looking for a legal expert to draft a non-disclosure agreement for you? Reach out to us at the earliest!