A non-disclosure agreement, or “NDA,” is a document used for preventing the sharing of confidential information. The contract identifies the type of info that must be kept secret, how long the recipient of the information must abide by the NDA, and what the recipient gains in exchange for signing the agreement.
The form is commonly used in business settings to encourage cooperation without the risk of vital information getting into the wrong hands.
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A non-disclosure agreement is a form used for safeguarding a company’s proprietary information that is both valuable and generally unknown to the public. The person or company receiving information is bound from disclosing it to any third parties unless explicitly permitted in the contract. Typically, an NDA will expire after a certain period of time, such as one (1) to three (3) years. The most popular use of the form is when hiring an employee.
A non-disclosure agreement can be drafted in three different ways to form the following types of relationships:
- Unilateral (“One-way”) – One party shares the information (the disclosing party), and another gains knowledge of it (the receiving party).
- Mutual (“Two-way”) – Both parties are required to keep information shared between each other under wraps.
- Multilateral – The sharing of confidential information when there are more than two (2) parties involved in the NDA.
If the contract will be mutual (both parties providing info to each other), it does not matter who completes the document. If it will be unilateral, the disclosing party should draft the form in its entirety.
Step 1 – Party Info
At the top of the contract, enter the date on which the document is being completed (day, month, and year). Next, write the full legal names of the person(s) or business(es). If a unilateral form, “1st Party” should be the one sharing the knowledge. If mutual, it can be either party.
Step 2 – Agreement Type
Check one of the two (2) options provided. “Unilateral” should be checked if only one party will be gaining knowledge of the confidential information, and one party sharing it. Otherwise, “Mutual” should be selected.
Step 3 – Party Relationship
Here the parties can list their relationship with one another. For example, if the “1st Party” is the employer of the “2nd Party,” the first field will contain the word “employer” and the second field would say “employee.”
Step 4 – Obligation to Return Info
If at any time or for any reason the disclosing party (or both parties, if applicable) wishes to have the other party return said shared materials, the other party is required to comply. Write the number (#) of days either party has to fully comply with said request.
Step 5 – Governing Law (State)
Each state has its own statutes pertaining to trade secrets. Enter the name of the state in which information will be shared.
Step 6 – Signatures
At a minimum, the 1st and 2nd parties need to sign the NDA. However, they can utilize witnesses and/or a notary public to prove both parties willingly signed the form (and understood what they were signing). If witnesses are used, they should be unrelated to both parties.
Step 7 – Notarization
The last page is reserved for the Notary Public (if applicable). Notarization can be done online (through eSign) or in-person (visit a financial institution, law firm, library, etc.). Keep the certificate of acknowledgment page attached to the document even if it is not used, as the markings at the bottom of the document state there are four (4) pages total, and a missing page can cause the court system to question the validity of the contract.