The non disclosure agreement (NDA) - What you need to know about it!
A non disclosure agreement (NDA) is a written agreement in which confidentiality is agreed regarding negotiations and their results, confidential documents, discussions, etc.
The contracting parties undertake not to disclose any information to third parties. Synonymous terms are confidentiality agreement, non disclosure agreement, non disclosure contract or confidentiality agreement.
In contrast to trade secrets, which are subject to statutory provisions, the NDA is a non disclosure agreement.
This means that the contracting parties have a free hand in shaping the content, provided that it does not violate applicable law, statutory regulations and prohibitions or morality.
- In which cases does a non disclosure agreement NDA make sense?
- Unilateral and bilateral non disclosure agreements
- Typical contents of a non disclosure agreement NDA
- Advantages and disadvantages of a confidentiality agreement
- Do not forego sound legal advice
1. In which cases does a non disclosure agreement NDA make sense?
Non disclosure agreements are used in many areas and are of great practical importance in everyday business life.
They are intended to protect business secrets and special know-how of companies that become known to the respective contractual partner in the course of joint projects and other cooperation.
Non disclosure agreements are usually concluded:
- in the initiation of business contacts
- between companies and service providers such as advertising agencies or freelancers
- in negotiations on patents and related licensing
- for company mergers and sales
- between companies and their customers and suppliers
- between software manufacturers and testers of beta versions
- between companies and consulting firms, coaches, etc.
- between companies and investors
- between employers and employees
If you as an entrepreneur are affected by such a situation, you should not do without a non disclosure agreement to ensure that internal company information, sensitive data, document content and negotiations are treated as strictly confidential by your contractual partner and are not shared with external persons or other companies.
The timing is also important: the non disclosure agreement NDA should ideally be concluded before the actual negotiations on a collaboration.
2. Einseitige und zweiseitige Verschwiegenheitserklärungen
In a unilateral non disclosure agreement, only one party to the contract is obliged to maintain confidentiality. For example, if you want to print a mailing and have it sent out by a service provider, you can use a one-sided NDA to stipulate that they will not pass on any address data to third parties.
A bilateral non disclosure agreement is recommended for joint product development, for example, where two companies need to share certain business secrets and other internal information.
3. Typical contents of a non disclosure agreement NDA
As already mentioned, when drafting a non disclosure agreement, you are free to decide what content you want to include and how detailed you want to make it.
However, there are some basic points that appear in almost every non disclosure agreement and that you should take into account.
Here is an overview of the most important details:
Contracting parties: List the parties involved with the exact name (ABC GmbH, Mustermann AG, etc.) and the company address.
Subject of the agreement: Describe the project for which you want to work with the other contractual partner. Here, too, you should pay attention to precise wording in order to avoid misunderstandings.
Definition of the information to be treated confidentially: You should proceed carefully with this point and record which information - business secrets, patents, special know-how, customer data, etc. - is specifically eligible for confidential treatment. - Specifically, you should define what information is to be treated confidentially. Conversely, you can also describe here what is not necessarily subject to confidentiality.
Permissible and impermissible procedures and activities: Define what information may be used by both parties and for what purpose. What should be prohibited in any case? What data may be passed on to third parties?
Contractual penalties: This point sets out the consequences of non compliance with confidentiality on the part of one of the contracting parties. This can be, for example, the amount of a compensation payment.
Period of validity of the agreement: Specify the period of time during which both contracting parties must maintain confidentiality.
Applicable law and place of jurisdiction: You can define here, for example, that the contract is exclusively subject to German law and that the place of jurisdiction is the location of your company headquarters.
4. Advantages and disadvantages of a confidentiality agreement
A non disclosure agreement (NDA) is useful to protect you to a certain extent against economic damage and loss of image. This is especially true when it comes to sensitive data.
In the age of digitalization, however, it can also easily happen that information that is part of your agreement is accessed by third parties, such as cyber criminals, and becomes public without your business partner having anything to do with it.
If you then suspect them, this will quickly lead to a loss of trust that will cause the planned project to fail. It may even lead to long and expensive legal disputes.
Also bear in mind that when developing a new product or service with a business partner, feedback from a third party is often required to test the success or failure of the project. A non disclosure agreement could be a hindrance here.
5. Do not forego sound legal advice
A non disclosure agreement (NDA) is a sensible basis for contract negotiations of any kind. However, you should think carefully in advance about what content should be included in such an agreement and what contractual penalties should be defined in the event of a breach by your business partner.
As a specialist lawyer for intellectual property law, I recommend that you seek advice from an expert. I will be happy to assist you with my experience and in-depth knowledge in this field.
Simply make an appointment with me so that we can discuss your concerns in detail in a personal meeting.
Do you have to sign or draw up a non disclosure agreement (NDA)?Make an appointment now!
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