Entrepreneurs often need to share confidential information about their business. This may happen when you are forming a new business partnership, outsourcing projects, hiring new employees, or seeking outside funding.
Confidential information can include business strategies, financials, customer or vendor lists, trade secrets, unpublished patent applications, or any other information you want to keep private.
It is important to protect your business’s sensitive information before it is shared with others. To do this, you may want to use a non-disclosure agreement (NDA) to ensure that the party receiving your confidential information is obligated to respect your confidence and not use the information without your permission.
Among other terms, an NDA should identify the person(s) to whom information may be disclosed, what information is considered "confidential," and the restrictions on the use of the information. The clearer these terms are the better.
NDAs can be unilateral/one-sided agreements for situations where only one side is sharing confidential information. Or, they may be mutual, for situations in which both sides intend to share sensitive information.
However, in some instances it can be challenging to get the receiving party to sign an NDA, and NDAs can be challenging to enforce if they are too broad or vague or if the infringement is unclear. We always recommend working with legal counsel to prepare a proper NDA and advise on the best way to protect your confidential information.