Benefits of Non-Disclosure Agreements
Non-disclosure agreements are legal contracts used to protect trade secrets and other confidential information. They’re often used in business, but you might also see them in personal matters. NDAs are very beneficial for those who wish to keep information private, including small businesses or people who want to protect their privacy. NDAs form a written agreement between two parties: the disclosure and the receiver. There are monetary and criminal penalties for breaching an NDA, so it’s important to know how to use them properly.
1. Freedom to Discuss your Company’s Policies and Practices
This is one of the most important benefits of NDAs. Without an NDA, you will be able to freely discuss your company’s policies and practices with other people. This could include discussions about how you run your business, what you do for a living, and your company’s products and services. If some clients or employees work at your place of business, they can also talk freely about what you do without fear of being sued or losing their jobs.
2. Protect Important Information
If there is extremely valuable information to the public or your business, it could be kept under wraps through an NDA. If a client wants to know how their car was repaired or if a prospective employee is curious about the inner workings of your company, this kind of information can be protected under an NDA. An NDA can protect certain details that are considered your trade secrets. This includes information on your company’s products, processes, and business practices.
3. Keeps People from Stealing your Ideas
Jonathan Osler points out that non-disclosure agreements can prevent people from taking your ideas and using them for their benefit or to prevent stealing your information. For example, if you’re a business owner, you might want to protect a new product that you’ve just invented. You could use an NDA to ensure that the product stays secret until it’s ready for mass production.
4. Protect Personal Information about Clients or Employees
Many small businesses have personal information about their customers or employees that is extremely sensitive and valuable. This kind of information can also be protected under an NDA so that it doesn’t become public knowledge through other people talking about it. For example, if a customer of yours is going through a divorce and you have access to their personal information, this could be protected under an NDA.
5. Protects Intellectual Property
This is another important reason to use NDAs. If you own a trademark or patent, this kind of information can be protected under an NDA. If someone else uses your trademark or patent without your permission, they could be subject to legal action from the property owner. This is one way that NDAs can protect your intellectual property rights and keep them out of the hands of others.
6. Protects Confidential Research
If you’re working on a new product or service for your company, you might want to protect certain aspects of it from getting into the wrong hands. For example, if you’re working on a new type of food product for your business, there could be details about it that are considered personal research that could be protected under an NDA. This would keep your research information out of the hands of competitors and other people who might try to steal it for their use.
Jonathan Osler is a consultant who teaches businesspeople how to use NDAs in their business. He has written the book “Business Non-Disclosure Agreements: An Essential Guide for Business Owners, Managers, and Executives, ” published by McGraw-Hill Professional. Osler is skilled in this and much more.