5 Key Elements for Your NDAs

Businesses and companies use NDAs or Non-Disclosure Agreements to protect confidential information.  However, if an NDA does not contain certain elements, it may not be legally enforceable. A Maryland business attorney can help you ensure that you include all key elements in your company’s NDA to make the agreement effective and enforceable. Below are five key elements that a business should include in its NDAs. 

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What Should You Include in Your Non-Disclosure Agreement? 

Besides naming all parties to the NDA, five essential elements every NDA should include are:

1.          Description of the Confidential Information

 The scope of the NDA will be largely guided by the information that is considered confidential. The parties may agree that all information disclosed by either party is considered confidential information. The party requiring the NDA may describe confidential information or describe the way information is deemed confidential, such as stamping a document confidential.

Often, an NDA includes a catchall clause that makes any information confidential that a reasonable person would assume is confidential. The person requiring the NDA typically makes this section as broad as possible to protect company secrets, intellectual information, and proprietary information.

2.          Requirements and Obligations of the Parties

The NDA should define the obligations and requirements of each party, specifically the party receiving the information. The party receiving the information should be required to protect the confidentiality of the information and refrain from using the information for personal gain. In most cases, keeping information confidential involves taking reasonable steps to prevent access to the information by other individuals. This section of the NDA needs to be clearly defined so the party requiring confidentiality can sue for damages if the other party breaches the NDA. 

3.          Exclusions to the Confidentiality Agreement

There may be instances in which a party must share confidential information in the normal course of business. For instance, an employee must disclose information to a third-party servicer who requires the information to perform an approved job. Information that is already publicly known and information independently developed by the recipient is typically not included in the NDA. Recipients are also typically not held liable when forced to disclose confidential information as part of a legal proceeding.

4.          Term of the Non-Disclosure Agreement

The person protecting information typically wants the agreement to be indefinite. However, a recipient typically wants a definite term inserted into the agreement. Regardless of the agreement between the parties, the term of the agreement should be clear to avoid any misinterpretation if a breach of the agreement occurs.

5.          Consequences of Breach of the NDA

An NDA also needs to define the consequences of a breach of the confidentiality agreement. The consequences may include liquidated damages, end of an employment agreement, termination of a contract, and award of attorney’s fees and costs against the breaching party. Seeking injunctive relief from the court may also be a consequence of a breach of the NDA.

Contact a Maryland Business Attorney for Help

Drafting a strong Non-Disclosure Agreement that protects your business is a key factor in avoiding the risk of severe consequences of a breach of confidentiality. A Maryland business attorney provides guidance and legal advice on how to draft and implement NDAs in all your business relationships. Contact Thienel Law today. Maryland business attorney Steve Thienel is dedicated to assisting clients in Maryland, Virginia, and throughout the DC Metro area.