Importance of Non Disclosure Agreement and benefits

A Non-Disclosure Agreement is defined as a confidential document that binds two parties into a legal contract. In the contract, they agree not to disclose information covered in the agreement.

The agreement creates a confidential relationship between the parties, typically to protect all kinds of confidential and proprietary information.

It is often signed when two companies, individuals, or other entities, for instance a partnership firm or a society etc.) are considering doing business together. It creates a confidential relationship between the parties who through this contract “agree” to not “disclose” the shared information, hence the term “Non-disclosure agreement”. It is also called “Confidentiality Agreement”.

Non-disclosure agreements are an important legal framework used to protect sensitive and confidential information from being made available Companies and start-ups use these documents to ensure that the chances of their good ideas being stolen by people are minimal.

When the parties are bounded by a legal document, there are minimal chances of the misuse of necessary information.

A Nondisclosure agreement or NDA is crucial for various reasons, it serves multiple purposes, it is beneficial because it is applied to the company’s especially large corporations to:

• Protect informationshared between two or more parties, the information is crucial, because if the information is made public it could have a negative impact on the profits and eventually the reputation of the corporation.
• Disclose information required to be mentioned to the employees and parties without which the business cannot earn profits.

Moreover, if one party to the agreement breaches the contract and fails to present an appropriate reason for it, the other party has the option to take legal action against that party and also sue them.

Elements
 

The Non-disclosure agreement has to be simple; it only needs to specify the necessary details so that the possibilities of error and misinterpretation are eliminated.
 

Some of the essential details while preparing the agreement are:

• Identification of the parties
• Description of what it should go in the agreement
• The scope of the confidentiality obligation by the receiving party
• Segregations from confidential treatment
• Duration of the agreement

Following are the topics of (NDA) Non Disclosure Agreement in India:

• The regulatory authority

In India, the non-disclosure agreement is governed by the Indian Contracts Act, 1872.

These agreements are introduced into the system in order to boost and protect the important rights like databases, client lists, proprietary information, and sensitive company-related information of a person or company.

• Validity

Every non-disclosure agreement is different and it depends on the parties as to how they want the agreement to be and what details do they want to specify, but a standard duration of 1 – 10 years are usually set aside as the duration.

• Types

1. Unilateral: A unilateral agreement is a contract that is specifically for one person, for instance, at the time of job offer, an employee is expected to sign a non-disclosure contract in which he agrees not to disclose any confidential information about the company he is working in. Even though two parties are involved in this type of an agreement, it is mainly for one person.
2. Bilateral: Both parties share information with each other that they are not supposed to disclose.
3. Multilateral: When a group of individuals are involved in the information sharing of a business, they are all bound to a multilateral non-disclosure agreement.
4. Mutual: A mutual non-disclosure agreement is when two businesses are engaged in a partnership or a joint venture and they mutually agree not to release and make public any information.