Why do I need an NDA?
A non-disclosure agreement (or: NDA) is an agreement in which parties agree to keep certain information secret in situations where information is shared. For example, confidential information may be shared when your business hires a freelancer or if you are negotiating for a partnership, collaboration or acquisition. An NDA serves to ensure that certain shared information remains confidential and is not shared further by the parties.
In the NDA, the parties lay down what information they regard as confidential and may not be disclosed to any other parties without permission. They further make arrangements on the consequences of 'leaking' such information by one of the parties. The conclusion of an NDA enables the freelancer to continue his work undisturbed and parties to freely and actively negotiate, since information is shared with solid safeguards. The NDA thus plays a key role in everyday business life.
Common cases requiring an NDA:
- Negotiations for sale or purchase
- Hiring a freelancer for a certain project
- Negotiations for an IP license
- Negotiations for a future partnership
What does this non-disclosure agreement include?
The main object of an NDA is to define the purpose for which the parties exchange information and to establish what information is regarded 'confidential'. The NDA can be drafted in both unilaterally (only one party discloses information) and bilaterally (both parties exchange their information). It further determines the consequences for any breach of confidentiality, such as liability for the damages caused by the 'leak' or any fixed penalties for such breaches.