Non-disclosure agreements (NDAs) are legally binding contracts designed to protect confidential information. Also known as confidentiality agreements, confidential disclosure agreements, and proprietary information agreements, they all have the same goal in mind – to prevent another party from sharing sensitive information with unauthorized individuals.
For Florida business owners, NDAs play a critical role in protecting the organization and are used widely in many situations, including during the merger and acquisition process and to protect information like business plans, customer lists and other intellectual property. One reason businesses use NDAs is to maintain their competitive advantage by ensuring that confidential information will remain confidential.
Types of NDAs
There are two types of NDAs:
- A unilateral NDA – where only one party discloses confidential information, and the receiving party agrees to keep it confidential, and
- A mutual NDA – where both parties disclose confidential information and agree to maintain its confidentiality.
Consult a business law attorney to determine which type of NDA is right for your situation and, just as importantly, to ensure the language used in the contract is properly drafted and executed.
Implications of NDAs
NDAs are enforceable legal documents but only if they are properly drafted and executed. We strongly urge you to consult an experienced business law attorney to ensure the language in your contract is precise and the document well-drafted. Here are a few other aspects to keep in mind when it comes to non-disclosure agreements:
- NDAs are used to protect business information – NDAs help businesses by ensuring that any sensitive information shared with employees or third parties remains confidential. These agreements provide a layer of legal protection for trade secrets and set clear expectations and consequences in the event of a breach.
- NDAs are enforceable (but “enforceable” comes with an asterisk) – For an NDA to be enforceable, it must be signed, properly drafted and executed. Issues like overly broad language, lack of a defined time period, or the inclusion of non-confidential information can render an NDA unenforceable.
- Breached contracts may result in legal recourse – If an NDA is violated, the affected party can seek legal action, including injunctions to prevent further disclosure and claims for financial damages. Common legal claims include breach of contract, misappropriation of trade secrets and copyright infringement.
To hammer home the point, the effectiveness of an NDA hinges on clear and precise language. Ambiguities can lead to legal disputes and breaches of confidentiality. A well-drafted NDA should clearly define obligations, safeguard sensitive information, and ensure all parties understand their rights and responsibilities. For help drafting non-disclosure agreements or another type of corporate agreement to protect your business from unnecessary legal disputes, contact our team at the Law Offices of Alex D. Sirulnik, P.A.