With all the recent talk of NDAs in the media, there has been confusion and controversy surrounding such agreements. Often getting confused with a Settlement Agreement (SA) which are usually used in the termination of employment contracts. Therefore, we wanted to write a two-part blog to clarify the difference between Non-Disclosure and Settlement Agreements. Most importantly, we want to highlight why in both matters, it is vital to get professional guidance. This month we will focus on the controversial Non-Disclosure Agreements (NDA).

A Non-Disclosure Agreement is also known as an NDA, “confidentiality agreement” or “gagging order”. It’s a legally binding contract of confidentiality which protects you when it’s necessary to share confidential information about your business. For example, you may require advice from accountants, financial advisors or marketing agencies. In order to give such advice, they may require details about your business you wouldn’t usually provide. As such you could be leaving your company vulnerable to such data being shared. A good NDA allows you to share ideas and information in confidence.

The non-disclosure agreement can offer one-way protection or mutual. You would use the one-way NDA when only one party is disclosing sensitive information. However, if more than one party is sharing information then you would enter a mutual NDA.

NDA has been notoriously used to protect individuals from criminal charges. This has been highlighted in recent media stories. Consequently, they have come under a moral question. But realistically, without them, many businesses would leave themselves vulnerable. How can you develop ideas without involving others? Ultimately despite its controversy, the NDA is a necessary business tool.

The Risks of Non-Disclosure Agreements.

As the agreement is legally binding it is imperative that all parties understand their obligations. From the very start of the agreement, it is important to know what you are asking and be clear. The document must be precise and detailed in its purpose. Remember, the permitted purpose can be widened at any time, however, you cannot narrow the restriction of use post-agreement.

This is just the basics, there are many factors which must be reviewed before entering into a Non-Disclosure Agreement. Such as location; if both parties do not reside in the same country the NDA must state which law governs the agreement. This coupled with the ongoing controversy are very good reasons you should seek professional advice. If you are an employer with questions about NDAs, you can view our services below or call 01780 770 770.

So What’s a Settlement Agreement?

Good question! We will be covering settlement agreements in next month’s blog. So, watch this space. You can follow our social media below to see the announcement of our next blog.