Arthur R. Lehman, L.L.C.

What are nondisclosure agreements?

Depending on the type of business they are in, companies in New York and elsewhere have certain priorities. For some, this means taking extra precautions to protect business secrets. These business secrets are often the core of the company's identity, making it what it is and causing it to stand out in the market and keep up with other competitors. If this information is revealed, it could be detrimental to the company. Thus, employers and business owners take steps to ensure their employees keep these secrets as well.

What are nondisclosure agreements? This document is a contract. It is signed by both parties, and contains terms ensuing that the employee promises to protect the confidentiality of a business secret that has been disclosed to him or her during the course of employment or during a business transaction.

The benefit of a nondisclosure agreement is to protect the business if someone later discloses secret information. The agreement could be used to sue the employee that violated the agreement, or to obtain a court injunction to stop a person from violating the agreement. With the growth in high-tech and information-based industries, so too has the usage of these documents grown.

The main or underlying purpose of a nondisclosure agreement is to create a confidential relationship between a party that holds a trade secret and the party that has had the secret disclosed to. Thus, the parties to the contract have a legal duty to keep the confidential information in confidence. When drafting a nondisclosure agreement, there are five basic elements to keep in mind. This includes the definition of confidential information, any exclusions, the obligations and duties of the party receiving the information, the timeframe the agreement will be valid and enforceable, and any miscellaneous provisions necessary.

Including a nondisclosure agreement might serve a business very well. While an employer might have great trust in their employer-employee relationships, it is important to take steps that will better protect the business and its trade secrets.

Source: FindLaw, "A Nondisclosure Agreement," accessed Jan. 6, 2018

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