Most successful businesses are started when the owner has a creative idea. What many people do not understand, however, is that this idea is also one of the company’s most valuable assets and, as such, it should be protected. Whether it is a new type of consumer good or a service that meets a need, it can be worth a significant amount of money.
One of the easiest and most effective ways an employer can protect proprietary information is to use non-disclosure agreements with all business partners, employees, vendors, and other third parties that are granted access to it. This type of contract may also be called a “confidentiality agreement.” It allows your company to safeguard its confidential information by contractually binding the party that signs it to keep your proprietary information protected and to only use it for the agreed-upon purposes as set forth in the contract. Similar to other types of agreements, a non-disclosure agreement outlines the remedies that your business will be entitled to recover if the terms of the contract are breached. The remedies available in a non-disclosure agreement often include both monetary damages and injunctive relief.
A confidentiality agreement can be uniquely tailored to meet your specific needs, but some of the important provisions to include are:
- Identification of the information that is to be protected. In other words, the agreement should clearly define what constitutes confidential information that is protected from being disclosed to other parties.
- Identifying approved disclosures. There are certain instances where the disclosure of the confidential information is warranted, so the contract should specify these circumstances and identify the parties to whom approved disclosures can be made. For example, the disclosure of protected information may be necessary to lawyers, insurance agents, accountants and bankers.
- Setting forth remedies available for breach. The contract should outline the remedies that are available to the non-breaching party if the terms of the non-disclosure agreement are violated.
- General terms. Non-disclosure agreements should contain the same general provisions that other contracts have including the governing law, dispute resolution requirements, and other similar stipulations.
When you require other parties to sign non-disclosure agreements, it sends the message to them that you are not only trusting them with something valuable, but also that you will pursue your legal options if they violate your trust. This knowledge can go a long way in protecting your company whether a lawsuit becomes necessary or not.
If you are interested in learning more about non-disclosure agreements or how we can assist you with your business-related needs, contact the knowledgeable lawyers at The Swenson Law Firm to schedule an appointment.