Before I jump into to this blog, I want to preface this by stating that I am not a lawyer and this is not legal advice. I highly recommend reaching out to a legal expert when creating your Non-Disclosure Agreement (NDA). I am simply presenting the elements that help to make this stronger but this is not a conclusive list. Each NDA varies depending on the degree of the arrangement between the business and the recipient.
The best thing you can do as a business is protect yourself especially when hiring. This could be an employee, contractor, freelancer, consultant, intern or even a third party.
In this post, you will learn what a non-disclosure agreement is, the two basic formats of an NDA and the elements to drafting a strong one. This post will also talk about the recommendations for businesses when working with remote individuals from other countries.
A non-disclosure agreement is a contract preventing private and confidential information from being leaked or used that impacts a company’s success between the person who holds the confidential info and the person receiving information that is non-public.
There are varying combinations of NDA’s in business. The most common are typically between the employer and employee, business owner and contractor, or entrepreneur and virtual assistant.
Non-disclosure agreements come in two basic formats:
Non-Mutual vs. Mutual NDA
The two basic formats of an NDA are non-mutual and mutual agreement. A mutual agreement is used when both parties may have confidential information to share with each other. This in turn protects everyone’s confidential information. A non-mutual agreement is the ones most commonly used between an employer and employee. It’s a one-sided agreement where only one party is disclosing and sharing confidential information.
There are about eight key elements to an NDA. Each serve a different and critical purpose to creating the foundation of this agreement. This may sound lengthy and overwhelming but they don’t have to be.
Set A Clearly Defined Time Frame
This is the length of time your NDA is valid for. In order for this to be effective, your time frame has to be realistic and clear.
Unrealistic and unclear: about 48 hours – 17 days
Realistic and clear: 1 year
Define the Confidential Information
Depending on the business, the confidential information in question may vary. Here are a few of the most commons pieces of information that businesses are protective over:
- Patent agreements
- Client lists
- Personal informational about people involved in a project
- Trade secrets
- Proprietary information
- Business plans
- … and more
It’s also important to note that while the items listed above are mostly physical materials, an NDA should cover whether oral information can be conveyed. The more specific this piece is the less easy it is to find and create a loophole.
Explain Why You’re Sharing It
You obviously don’t want to share this information with just anyone so it’s important to note why you’re sharing it with the people you are. More than likely you’re sharing it because it’s needed to do their job better and they can’t perform their job without it.
How It’s To Be Used
This step goes hand in hand with the previous step. Include as much detail as possible as to how this confidential information will be used by the recipient.
If the recipient has access to the secret recipe, it might sound like common sense to not expand further, describe how
Establish Remedies for Breach
Nobody decides to enter into a relationship with someone who will create trouble or destroy the success of their business, but it happens. Should a misunderstanding occur and a dispute land both parties in court, it’s important to have an arbitration clause in place to outline the details and alternatives to the litigation.
This includes the jurisdiction for court, territory for governing laws, who is responsible for legal fees, monetary damage awarded and a mediation between parties.
Include Information About Everyone Involved
This step is pretty straightforward. The person disclosing the confidential information is labeled as the disclosing party and the recipient is simply referred to as the recipient. If the recipient is allowed to share or does business with the use of the confidential information, it’s important to include those third parties as well.
Describe How to Return and Destruction the Information
After a project, contract or relationship ends, both parties must be clear about what happens to the confidential information.
Remote work is becoming increasingly common creating a lack of physical materials. Businesses are now passing information through hard drives, cloud storage or emails to name a few. This is why it’s important to specify how the recipient must provide confirmation the info was returned or destroyed.
Should anything be leaked or occur that puts the business in jeopardy outside of the contract or working relationship, the agreement will hold the violating party liable.
Enforce With Signatures
To fully protect all parties involved and avoid any “he said, she said”, it’s highly recommended a witness is present when reviewing and signing the non-disclosure. An NDA should only be signed when all parties are in agreement about its terms.
As mentioned earlier, when doing business with different countries it’s especially important consult with an attorney. Even though the Electronic Signatures in Global and International Commerce Act (ESGICA) states NDA’s are binding when signed between countries, it’s important to note that some countries don’t recognize or enforce NDA’s and some countries have strict requirements of what should be included in the agreement to make it enforceable. An attorney can help businesses to better understand the law conflict and requirements that can occur between two countries.
From a Human Resources perspective, the best piece of advice would be to create a thorough hiring process that asks questions centered around their ethics, morals and values. Ask questions to determine whether or not they’ve handled confidential information before and if they’ve been a part of a breach or what they would do in a situation that breaches or pressures to breach a contract.
Agreements are meant to strengthen relationships and protect everyone involved as long as they abide by the rules outlined. If you feel that you are not sure about everything (really everything, as every detail matters) in your non-disclosure agreement, consider using an online NDA template, which is easy to fill out and legally right.
In my group, the Global B.L.E.N.D. there are a diverse group of individuals who would be happy to assist in further answering your questions around the knowledge of each of their countries and how a non-disclosure is recognized and enforced there. Click here to join. See you there!