WHAT IS A NON-DISCLOSURE AGREEMENT?
Parties exchange various confidential, information throughout a business transaction. Most of the time, the party disclosing the information intends that such information remain private and discreet.
A Non-Disclosure Agreement ("NDA"), sometimes known as a Confidentiality Agreement, is created to safeguard vital and commercially sensitive corporate data, such as manufacturing procedures, trade secrets, client lists, know-how, concepts, business plans, and technical knowledge.
Non-Disclosure Agreements are extremely crucial, and used in a variety of commercial relationships, including supplier and distributor relationships, employer-employee relationships, independent contractor relationships, merger and acquisition transactions, and more.
HERE’S WHY YOUR BUSINESS MUST HAVE ONE .
Without an NDA in place, sharing commercially sensitive information with a third party is potentially risky. A breach of confidentiality can occur when a worker divulges knowledge that is essential to your business, or when they reveal trade secrets to competitors. This can harm your business’s general reputation and brand. Losing the trust of your clients and consumers could have detrimental effects on your company such as losing out on important revenue .
The Coca-Cola case, in which a worker from Coca-Cola revealed the business' "Coke" trade secrets to PepsiCo, is one of the most famous instance of a confidentiality violation. The executive administrative assistant of Coca-Cola was found guilty of stealing information, including a sample of a new beverage that was being created by Coca-Cola. The executive administrative assistant received an 8-year sentence from the court, while the other employees received 5-year sentences. A $40,000 reparation fee was also assessed.
The benefit of having a properly executed NDA is a legally binding contract, and if either party violates it, the other party may take legal action against them.
Typical NDAs include a definition of "Confidential Information". This must include all information that the disclosing party wants to divulge to the party receiving the information. However, certain information are exempt from confidentiality, some of which are:
1. Data that without breach of the NDA, becomes publicly available after disclosure and is made available to the receiving party.
2. Information that is approved for public distribution with the Disclosing Party's prior written authorization.
3. Information that was created independently by the receiving party without using or referencing any confidential information.
4. Information that is already in the receiving party's possession at the time of disclosure and the receiving party can substantiate this prior possession.
WHAT HAPPENS IF YOU BREAK AN NDA ?(REMEDIES).
Anyone who violates an NDA may be ordered by the court to pay money damages to compensate for the harm they have caused. These losses in the value of trade secrets, lost revenues, or any extra costs linked to the breach can all be used to quantify the damages.
Additionally, Injunctions are routinely sought by plaintiffs as a remedy for NDA breaches forbidding the defendant from further revealing or utilizing the confidential information or trade secret that was covered by the NDA.