Collaboration is one of the main ways companies prosper. If one company has an innovative idea but they do not have the resources to bring that idea into fruition, they can collaborate with another company in a related field who has the resources to assist them. However, one of the key components for this cooperation is trust. Both parties must be able to trust one another with their confidential information and be assured that it will not be disclosed to anyone else. One of the ways New Yorkers can ensure their confidential information will remain confidential is by creating a non-disclosure agreement.
A non-disclosure agreement or a confidentiality agreement, is a document that ensures the other party will not use valuable information about your business or your idea in a way that is detrimental to you --either by stealing it or using it without your approval. The most common example of when an non-disclosure agreement may be useful is when you are presenting a business idea to a partner or an investor. It could also be beneficial when you are sharing marketing and financial information with someone who is considering buying your business. It may not be useful for startups though, if they are trying to raise funding from venture capitalists, as they may refuse to sign them.
A non-disclosure agreement can be mutual, where both parties may potentially share confidential information with one another, or it can be one-sided, where only one party is sharing confidential information. Whichever one you enter into, there are a few elements that they should contain. First of all, the parties to the agreement should be identified, as should the definition of confidential. The scope of the confidentiality obligation of the receiving party and the exclusions should be outlined as well.
A non-disclosure agreement is as complicated as it is essential. Protecting your confidential information is essential to a business's growth, and a non-disclosure agreement may be one way to achieve that. An attorney may be able to assist parties prepare an enforceable and all-encompassing agreement that provides protection from lawsuits.
Source: Forbes, "The key elements of non-disclosure agreements," Richard Harroch, March 10, 2016