NON-DISCLOSURE FAQ

What is non-disclosure?

When two parties get involved in a business transaction and at least one of those parties knows they’ll have to share valuable information, the act of requesting for non-disclosure becomes necessary. Non-disclosure simply means to avoid sharing that information – and it’s the priority of those who have information they don’t like being shared.

In order to make sure this happens, one party will usually suggest signing a contract, typically a Non-Disclosure Agreement. Through this agreement, one party agrees not to share information learned throughout the two parties’ interactions and transactions. But there are more non-disclosure documents that help ensure private information is kept private.

What type of Non-Disclosure Agreements are there?

Because of the need to protect a wide range of information, it follows that there are a lot of agreements focused on maintaining non-disclosure. In short, there are:

• Non-Disclosure Agreements (NDAs), Long-Form
• Non-Disclosure Agreements (NDAs), Short-Form
• Mutual Non-Disclosure Agreements
• Employee Confidentiality Agreements
• Business Plan Confidentiality Agreements
• Confidentiality and Non-Disclosure Amendment Agreement

Each of these agreements serves a specific purpose, generally dictated by the individual circumstances of the parties involved.

What’s the difference between a Long-form and Short-form NDA?

Essentially, both are the same document. There is, however, one glaring difference: the Long-Form NDA allows for additional terms that cannot be found in the Short-Form NDA.

Why doesn’t everybody just sign a Short-Form NDA?

In most cases, particularly in small matters, Short-Form NDAs are perfectly sufficient to protect information that is being transferred between two parties. The Long-Form NDA’s usefulness comes into play when one party has a high degree of specific information to protect. The Short-Form NDA is a “standard” NDA that generally covers all of the important issues at hand.

What is a Mutual NDA?

A Mutual Non-Disclosure Agreement is simply an NDA in which information is being passed between two parties – and both parties want to make sure that their information is protected. While all NDAs require that two parties sign and agree to them, the difference in the Mutual NDA is that the information being protected will flow both ways. This is particularly useful in business-to-business transactions.

What are Employee Confidentiality Agreements?

These are essentially Non-Disclosure Agreements that fall under the umbrella of an employer-employee relationship, rather than a business-to-business or business-to-contractor relationship. This form will have the employee agree that they will not share trade secrets or use their position to gain knowledge for the purpose of stealing and sharing it. Many companies have their employees sign these types of agreements as a matter of protocol.

What are Business Plan Confidentiality Agreements?

When working to generate a business plan, it is sometimes required that a lot of eyes get to see the contents of the plan. If this is the case, the chief author can use Business Plan Confidentiality Agreements in order to ensure that the information contained in the business plan remains privileged and is not shared except for the purposes of working on the business plan itself.

What are Confidentiality and Non-Disclosure Amendment Agreements?

If an NDA has been found to be insufficient, or the circumstances surrounding the NDA have changed, it may be necessary for both parties to sign a Confidentiality and Non-Disclosure Amendment Agreement in order to update the original agreement to correspond with the new circumstances. This is usually useful when job details change and a business wants to ensure that any new information shared with a contractor or other business will still remain protected.

When is it appropriate to use a Non-Disclosure form?

As you might imagine, there are a large number of situations that could call for a Non-Disclosure form to be signed.

Typically, Non-Disclosure is focused in business interactions. Any type of interaction – employee to employer, contractor to business, business to business, sole proprietorship to individual – could necessitate a Non-Disclosure form of some sort depending on the information shared. Many companies simply have all employees sign an Employee Confidentiality Agreement as standard practice, even if the jobs being filled do not correspond to learning specific trade secrets. Many Non-Disclosure forms are standard practice for this reason, even when dealing with short-term contractors.

When starting a business, these forms may be appropriate to use as well. For example, when generating a business plan, the Business Plan Confidentiality Agreement helps keep the idea behind the business a secret, as well as any planned ideas or trade secrets. A Potential Investor Confidentiality Agreement accomplishes the same thing but helps ensure that rival companies cannot pose as potential investors, learn about a business, and then use that information against that same business.

Additionally, Non-Compete forms, while they are not the same as Non-Disclosure forms, will typically be included as standard protocol at the same time Non-Disclosure forms are signed for this reason. Use both of these forms when you’re sure you have information to protect and you don’t want it falling into the hands of your competition.

What kind of NDA should I make my contractors/employees sign?

Depending on your purposes, it will be advantageous to make your contractors sign a standard Short-Form NDA and your employees sign an Employee Confidentiality Agreement. There is no need to get “fancy” and have them sign more documents or documentation than they need to sign in order for your information to be protected.

When are Non-Disclosure forms valid?

Although each Non-Disclosure form will have its own provisions, these contracts will generally adhere to the same standards as most contracts between two parties. A contract should be signed with the full will and capacity of each party, should represent a lawful agreement, and generally require that both parties are receiving some value from the agreement. This is usually not a problem for NDAs as they are typically signed before a transaction or business relationship takes place.

When are Non-Disclosure forms enforceable?

Many Non-Disclosure forms can actually outline a timeframe when it is still in effect; once this timeframe expires, the contract itself essentially becomes unenforceable except for any other provisions that don’t exist within the same time frame.