What’s a nondisclosure agreement anyway?

Lately we have been hearing about nondisclosure agreements. It's important to note that beyond the wonderful #MeToo and #TimesUp movements and porn star hush agreements, there's a whole world of nondisclosure agreements. 

So what is it?  "A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), hush agreement, proprietary information agreement (PIA) or secrecy agreement (SA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement."

Non disclosure agreements can be one-sided as in only one party's information is held to be confidential. Say for example you work for a company that is developing a new kind of computer software and they do not want you to disclose not only so people don't copy it, but so that the public isn't made aware of the software until an appropriate launch is set forth by their development and marketing team. By disclosing after signing a nondisclosure, you could be held liable for damages. 

In a mutual nondisclosure both parties are not to disclose. An example of this is a cupcake company buying special flour from a local mill. The mill may not want their secret to perfect flour to get out while the cupcake company does not want their recipes (which the mill may have been privy too in their supplier contract) to get out either. 

A nondisclosure agreement can be part of another contract. For example, there can be a nondisclosure clause in an independent contractor agreement. Or, a company can give a nondisclosure agreement out separate to each person they are working with in addition to their other agreement. For example, a company that has employees and contractors would give nondisclosures to everyone and then an employment agreement to the employee and an independent contractor agreement to the contractor. 

Why are they controversial? Any chilling/restraint/blocking of speech is always controversial. More so, they are often controversial because what if the person who signed it decided not to disclose but then the thing needed to be disclosed is vitally important (assault, employees instructed to add unnecessary chemicals to a factory made product, etc.). Because of this and the movements mentioned above, legislatures are trying to make laws so that nondisclosures will not apply to assault or battery. 

Are there good, proprietary protection reasons to have nondisclosures? Certainly!

Should you have a non-disclosure agreement and what should it say? The famous legal answer is "It depends." 

Contact us today to discuss if a nondisclosure agreement (in a contract or as a separate document) is appropriate for your business. Schedule your free 30 minute consult today.