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Non-disclosure Agreement

Posted By On June 5, 2008 @ 12:52 pm In Contracts | No Comments

One of the most popular types of contracts and one of the most commonly used when two corporations or companies are exchanging sensitive information is a non-disclosure agreement. Known mainly outside of the United States and Canada as a confidentiality agreement, the non disclosure agreement is considered a common type of contract when two corporations or when a corporation and an individual are exchanging sensitive or valuable information, such as secret ingredients or recipes to a popular product, or any other information that a company believes will damage them if it were to become public. These agreements usually aren’t very long and are quite straight forward. Some non disclosure agreements can last just a few weeks, much like a media blackout on a trial, or they can last weeks or even years. Some non disclosure agreements can even last in perpetuity, so that the details of the contract or arrangement can never be talked about or the agreement becomes null and void.

Another popular use for non disclosure agreements is among companies and employees. This can even extend down to companies and minimum wage employees who will come into contact with computer systems or business techniques that the company feels would benefit their competition. For example, for many years, Viacom’s Blockbuster Video made all new employees sign a non disclosure agreement as well as an agreement that forbade employees from working at any other video store or chain for a period of time after their employment at Blockbuster was ended. It was thought that certain aspects of working at Blockbuster could be shared and disseminated to their competition and that dissemination would cause harm. Similar agreements are signed all the time, especially if you are a high ranking employee of a company and you have access to trade secrets or other sensitive materials.

Some companies even go as far as stating that the existence of a non disclosure agreement can’t be disclosed. The idea is that once a NDA is admitted to, than both parties involved are admitted that they have something to hide.

Most NDAs contain the same basic sections as they usually aren’t long or complicated contracts. First, both parties involved in the agreement are defined and basic information on both sides is given. Next, the NDA will define what can’t be talked about and what the essential point of the contract is. Some complicated NDAs will even define each and every term that can and can’t be used by the parties involved. Some NDAs can be extremely detailed and particular, but this isn’t what many people would consider to be an “average” NDA. Next, the NDA will spell out what can be talked about and what is considered fair game. A period of time in which the NDA is in effect is often spelled out next. Finally, the NDA will spell out the ramifications of what can or will happen if the contract is violated.

As you can see, the average non disclosure agreement is pretty straight forward and is used to help protect industry secrets from becoming public knowledge.


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