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18 November 2021

NDA for IT Company - A Guide to Nondisclosure Agreement

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Want to protect your data and keep your information confidential in your professional relations? Sign an NDA.

An NDA, or nondisclosure agreement, is a legally enforceable contract that creates a confidential relationship between a person or company that has sensitive information and a person or organisation that gets access to that information. 

Of course, this exchange of sensitive or confidential information can also go both ways.

Don’t be surprised, as non-disclosure agreements are also commonly known as confidentiality agreements, confidentiality disclosure agreements, and non-disclosure contracts. All of them mean exactly the same thing. 

You may encounter them at the beginning of a business relationship or financial exchange and cooperation.

Join me to uncover all the intricacies and perfect your NDAs to protect information and trade secrets in your IT company!

Types of NDAs

There are two main types of NDAs—unilateral and bilateral. 

Unilateral NDAs oblige one party to keep the information specified by the second party protected. 

Bilateral NDAs commit both parties to keep each other’s info confidential. Here are some common examples of unilateral and bilateral NDAs.

Unilateral NDA Examples:

  • Hiring an employee- in most cases, you share your sensitive data with your employee, who is obliged to keep it confidential.
  • Hiring for help on a project or hiring a consultant- make sure to discuss options with your future partner, as some organisations or people may want to sign a bilateral NDA to protect their personal data or trade secrets (e.g., offers).

Bilateral NDA Examples:

  • Mergers- if you’re thinking about merging your organisation with another company, both parties need to protect their sensitive data and sign a bilateral NDA.
  • Selling your company- if you’re selling your company, it’s important to get to know the details about the buyer and establish whether they are able to pay and are willing to maintain your vision to keep the clients satisfied.
  • Collaboration with an individual or a company in which you both are desirous of each other’s secret information.
  • Two companies working together on a project.

Parts of a Non-Disclosure Agreement

All NDAs should include these specific elements:

Identification of Parties

This section, also known as “parties to the agreement”, identifies the people and/or entities involved in the NDA. This section describes the disclosing party and the recipient using names and addresses. You may also want to include relevant parties such as attorneys, accountants, or business partners.

Definitions

The Definitions section mentions different types of information covered by the NDA and establishes rules for handling the information. It clearly defines what information is should remain secret.

Obligations

As the name suggests, this section defines specific behaviour expected from each signatory in case of sharing information but also lays out the consequences of breaching the agreement.

Scope

A clearly defined scope is what ensures NDA enforceability. It’s important to clearly define what’s confidential, as using terms such as “proprietary information” has no legal binding and is not specific enough, hence scope should describe in detail what information is covered by NDA.

Time frame

Most NDAs are in force for a limited time period. Hence, most NDAs state the number of years signatories of the agreement must keep the confidential information secret. 

Even indefinite confidentiality agreements usually indicate when sensitive information is no longer protected.

Return of Information

After the end of business relations between the parties, an NDA may require the recipient to confirm that confidential information has been returned or destroyed.

Exclusions

These are the types of information that do not need to be kept confidential. This might include public knowledge, previously disclosed details or information someone knew before entering a business or financial relationship with a company or firm.

This section lays out the types of information that don’t need to be kept secret. 

Exclusions may include information such as public knowledge, previously disclosed details, or information known before entering a business or financial relation.

Remedies

This section defines what happens in case of a breach of the confidentiality agreement. There are many possible courses of action, or remedies, such as a restraining order, payment for damages, and other actions for breach of fiduciary duty and copyright, patent, or trademark infringement.

Tips on Creating an NDA for IT Company

Once you know what parts to include in your non-disclosure agreement, it’s time for some useful tips that will help you perfect your NDAs.

Your priority is to create a legally binding non-disclosure contract. To do so, you must always use precise terms when defining confidential information, parties, and scope. If your language and definitions are not specific enough or too vague, your document may not be legally respected.

Before creating an NDA, you must also be careful not to disclose any sensitive information that you want to cover with an NDA before signing the contract. Remember that non-disclosure contracts do not cover previously known information.

Last but not least, if you want to create and sign an NDA, you don’t need to hire a lawyer. You can use an NDA template. You can easily find some exemplary NDAs online. However, remember to use the template wisely and thoroughly review them before applying. You may want to have the document reviewed by someone with legal expertise.

Protect Your Confidential Information and Trade Secrets

Even though creating an NDA for IT company may seem overwhelming at first, there’s no point in delaying it. With the right approach and some legal review, you may easily create it using an NDA template and protect your confidential information.

On that note, remember that it’s absolutely crucial for you to sign an agreement as soon as you’ve decided to engage in a joint venture or other business relationship. The sooner you sign an NDA, the sooner you can move your company forward.

Successfully manage your IT projects

Author
Jacek Zadrąg
Chief Operating Officer