Non-Disclosure Agreements: The Dangers of the “One Size Fits All” Mentality

While most businesses have experience dealing with Non-Disclosure Agreements, they may not fully understand the legal implications of them. Non-Disclosure Agreements, sometimes known as Confidentiality Agreements, are legal documents between two parties who both agree to maintain confidentiality about certain specified information. They are often signed between employer and employee at the time of hiring or between new business partners at the start of a working relationship.

Non-Disclosure Agreements seek to protect things like inventions, upcoming plans for products or projects, marketing materials, formulas, pricing, and client lists. They should cover any information that you would not want your competitors or the general public to know, including trade secrets.

Non-Disclosure Agreements are legally binding. If someone breaks their confidentiality while still being covered by the Non-Disclosure Agreement, they can face serious consequences. This creates a pact of enforceability giving purpose to the agreement.

One of the major challenges that many businesses run into with Non-Disclosure Agreements is assuming they can use boilerplate contract language. For more information on this specific topic, watch this Video from our founder Chris Clark.

The dangerous misconception that all Non-Disclosure Agreements are the same can have dire consequences. In fact, every single Non-Disclosure Agreement should be tailored to the specific situation it oversees. An effective Non-Disclosure Agreement should clearly outline what information is protected and for how long. Non-Disclosure Agreements cannot be legally binding if they demand eternal confidentiality, so setting a specific end date and tailoring to your relationship are required in order to be enforceable.

As far as what should be covered in your Non-Disclosure Agreement, it depends entirely on your situation. When using one, you should consider your relationship with the other party and how it could affect the future of your business. Taking care up front to draft your Non-Disclosure Agreement properly will make it less likely you will face undesired situations down the road.Non-Disclosure Agreements may seem like a commonplace occurrence in the business world, but getting them right is hugely important. It is essential to craft them towards the situation they cover and not attempt to enforce someone else’s commonplace agreement. Contact CLARK.LAW for more information about creating a custom Non-Disclosure Agreement. We deliver creative legal solutions for businesses, where and when they need them.

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