Consider these 4 key steps when creating a nondisclosure agreement.
1. Outline Scope of a Nondisclosure Agreement
The scope of an NDA refers to what information should remain confidential. To protect your company’s interests, it’s best practice to include a blanket statement noting any information a reasonable person would assume should be kept confidential applies.
While standard templates for nondisclosure agreements exist on the internet, it’s best to only use those as a starting point, and draft a document specific to your company’s needs.
2. Outline Potential Exclusions
Next, outline any exclusions that are not necessary to keep confidential, including:
- Information that the other party already knows
- Information that’s publicly available
- Independently developed information
- Information learned from a third party
These types of information don’t typically require protection. Legally, you would have no recourse to protect information that’s readily available to the public.
3. Define Nondisclosure Terms
The term is the length of time specified in the NDA that the conditions will remain in effect. In most cases, the term runs one to five years, though they could continue indefinitely. The right amount of time varies depending on the specific circumstances.
4. Outline Consequences
Include the consequences of breaking the agreement, including whether the party has the right to sue for damages or if a monetary amount should be provided in case of breach of contract. The penalties for violation of an NDA vary according to the situation and the laws of each state.