You may have heard the term non-disclosure agreement, but be unsure as to what it actually means. The answer is it is a legally binding confidentially agreement between two parties.
This is written up in order to ensure that confidential and extremely sensitive information between the two parties remains just that, ie private and not revealed to another individual or find itself put into the public domain for general consumption.
Free Non-Disclosure Agreement (NDA) Template UK
Although an NDA is legally binding, it’s not necessary to have the contract drawn up by a lawyer. Instead, you can download a free non-disclosure agreement template which you can later customise to apply to specific legal requirements in any of the four-nation countries you happen to be working or living in. That’s because England, Scotland, Wales and Northern Ireland will all have their own specific legal guidance (although this shouldn’t change too much). Certainly, this non-disclosure agreement template has been looked over by lawyers, and it complies with English law.
What is a Non-Disclosure Agreement?
A non-disclosure agreement is a legally binding contract that, if breached, can prove extremely expensive to the guilty party. Both parties sign the NDA to say they agree with the contract and its terms ie that the recipient of the commercially sensitive should not disclose it.
It’s worthwhile to note too that there are two kinds of NDA available. One is a non-disclosure agreement between two companies or individuals, or an individual and a company where one party discloses sensitive information to the other. This is referred to as a standard non-disclosure agreement (also known as a unilateral confidentiality agreement).
The second type of NDA contract is similarly between two parties but it is where both sides are required to keep the information confidential. This could be, for instance, when two companies are working together. In this type of situation, it’s always neater to have two individual agreements where both sign as a recipient of information on their own NDA. This is referred to as a mutual non-disclosure agreement.
Who is involved in a non disclosure agreement?
The NDA agreement is between two parties – the individual or group which is disclosing the information, and the recipient of that same data who is then obliged to keep it confidential. The ‘giver’ of the information is more often than not a company or large organisation. But it can also be an individual ie an inventor of a new product who needs financial backing from an investor but doesn’t want the details of his or her invention to be leaked into the public domain, or copied by another party.
The recipient may also be a large organisation in turn or a small company. Most NDA forms allow you to add as many individuals as you would like to the contract.
Allowing the information in an NDA to be used
Although the information referred to in a non-disclosure agreement mustn’t be publicly known, there are plenty of times when it can be used. That’s because it’s useful for the recipient to do so ie he or she can refer to it when designing their logo, writing content for a website etc.
The main point is that the recipient mustn’t disclose the information but can refer to it in the course of their work. They mustn’t however, talk about it so that it becomes known in the public domain ie when being interviewed for an article in a magazine etc.
When is the best time to use a confidentiality agreement template?
A freelancer will usually sign a non-disclosure agreement with a company. That’s because they will have access to that company’s clients and information on how both the company and client operates. As such, it wouldn’t do for his information to fall into a competitor’s hands, or for the freelancer to work with the client independently (ie cutting out the company who introduced him or her to the client in the first place).
It may also be that an NDA is used when a business is up for sale and the buyer wants to have access to how the business operates. The buyer would normally do this as part of their routine due diligence into the purchase.
What information is considered confidential?
There are a variety of different types of information that a company or an individual may wish to keep private and out of the public domain. This includes data on customers, such as their buying preferences, contact info, how much they’ve spent with the company etc. A non-disclosure agreement can also extend to intellectual property, such as a patent for an invention, copywriting an image or text, a company logo or trademark, and even specific commercially sensitive knowledge.
Financial companies, branding and marketing operations and copywriting businesses will all deal with sensitive company information, whether that is in terms of finances eg profit and loss, cash flow and pricing, or marketing strategy and future aims and vision of the company in question.
How long is a Non-Disclosure Agreement last?
If there isn’t a date on the non-disclosure agreement then the information is assumed to be confidential indefinitely. This would apply to trade secrets, for instance.
If the information is made public by someone else (ie not the recipient of the information) then the NDA is assumed to be no longer in existence. That’s because the information is already in the public domain.
Additional clauses in an Non-Disclosure Agreement
There are at least two main clauses than can be found in a standard nda. These include a non-solicit clause and a non-compete clause. The first – the non-solicit clause – is aimed at preventing the recipient from luring away company employees or clients to work with them instead. The second – the non-compete clause – is to prevent the recipient from setting up a rival firm or revealing the information they have been made privy to, to the company’s competitors. Both of these actions would be breaching the terms of the NDA form.
What happens when the Non-Disclosure Agreement is breached?
In the event a non-disclosure agreement is breached then legal action can be initiated. Sometimes the terms of this is already included in the NDA, such as the penalty being a particular sum based on the amount of damage done, or the sum of money may already be stated in the contract. If it goes to court then it could be filed under Copyright infringement (where text, images etc have been used without permission), Conversion (interfering with personal property) or Misappropriation of trade secrets (ie disclosure to another party).
Also check out our free employment contract template here.
