Things to Consider Before Signing a NDA

What is an NDA?

A non-disclosure agreement (NDA) is a legally binding contract that creates a confidential relationship between the owner of a piece of information and the person(s) that information is disclosed to.

The contract ensures that the recipient of the information will not share, distribute, replicate, sell, or in any way release the information to another party. Generally, an NDA serves three functions:

  • Protects sensitive information

  • Protects patent rights of a new invention

  • Outlines what information is private and what is not

If the recipient of the information breaches the contract, then the owner can take legal action against the recipient for damages.

Here are some things to consider before signing a NDA.

What Is The NDA Asking Of You?

Have a clear understanding of what the NDA is asking of you before agreeing to the terms. What is the NDA asking to keep confidential and for how long? What type of information are you prohibited from disclosing? How can you breach the NDA? What measure must be taken to keep the information confidential?

The Consequences of Breaking a NDA

Thoroughly read through the documents and see what actions constitutes as “breaking” the NDA. All possible ways of breaking the contract should be highlighted so that both parties have the same understanding. Breaching a NDA could result in a lawsuit and/or termination of employment.

You Can Negotiate

If you see something that is unfair or out of place, you can always negotiate. Don’t be afraid to ask to modify or change the documents terms if it looks biased towards the other party. State any concerns that you may have and get them cleared up before signing a document that doesn’t benefit you.

Don’t sign a NDA if you don’t have a clear understanding of what you’re signing! Need help understanding your NDA? The lawyers at Stanko. Senter & Mitchell are well-versed in contract law and business law, and will gladly help you!