NDA 101: What is an NDA and how do you build secured non-disclosure agreements?

Protecting your data

Keeping the company secrets buried deep under the ground seems effective, but what must we do if sharing them is required to make those secrets profitable?

Keeping trade secrets and confidential information in order to have a competitive advantage is crucial for many companies. However, at some point even your most precious intel has to be shared: with an engineer that works on a project, with a client to whom you show the prototype, with the janitor cleaning up the negotiations room after you’re done passing papers around the table.

By the way, working with AXDRAFT does not require you to share any sensitive data with us—we gather only template data to automate your document workflow and even help your company go green.

To ensure protection of sensitive data, a Non-Disclosure Agreement (NDA) or, as it is sometimes called, a Confidentiality Agreement (CA) can be enforced.

What is an NDA? What does it help to do?

If the Ultimate Fighting Championship decided to create a megafight—confidentiality agreement vs NDA—they’d fail, because only one fighter would show up, since they are one and the same. Non-Disclosure Agreements are contracts that can be legally enforceable and are usually signed between a party that has sensitive information and a party that this information is being shared to. By signing the NDA contract, both parties agree not to disclose any of the information that will be shared between them.

An NDA contract is usually brought up, when confidential data has to be shared with suppliers, employees, investors - anyone who needs access to this information in order for you to go on with your plan. Signing this protective document establishes trust between parties, and keeps your intellectual property protected from theft or corruption. By the way, if it takes your lawyer over 30 minutes to draft a simple NDA, you may want to automate that process. Here are a few arguments for your lawyer to embrace document automation with zero friction—and also stay happy with their job.

Nobody knows exactly who came up with an idea to create nda agreements. We know that the first mentions of such documents began popping up around the 1940s, where an NDA was brought up in regards to maritime law. NDA contracts started making more sense later, when they were noticed in upcoming tech giants like IBM.

Which businesses need an NDA? What kind of data needs to be protected?

Like IBM, other tech companies too devise their own proprietary algorithms, and operate other sensitive innovations they want to protect, even from their own employees who may prove to be disloyal. Startups seeking investors may fear that their idea can be stolen in exchange for minor investments. What other situations might require you to sign an NDA? Let’s go through a quick list:

Are you planning to hire an outside contractor to analyze your operations? Create NDA and make them sign it. A Non-Disclosure Agreement can even help you project the recipe of your specialty, if you don’t trust your sous-chef.

Here are some examples of what an NDA can help you protect:

In fact, almost every business that has trade secrets and fears sharing them can create nda contracts to feel protected. Of course nobody is safe from breaches of NDA, as in cases with the whistleblowers a couple years ago. But if we’re talking about business, the costs of such a breach of NDA can be way too huge for a party that signed it to even consider such a thing.

Which data is NOT protected by an NDA?

Of course, a publicly shared Facebook post, or the first name of your company’s CEO might not fall under protection by a Non-Disclosure Agreement. So what else might not be safe when an NDA is signed?

Types of NDAs

Each NDA is unique, and will always refer to specific data under individual circumstances. However, every document that can be shown as an example when answering a simple question—what’s an NDA—falls under one of the two categories: Mutual NDA or Unilateral NDA.

The difference is close to none (remember ‘confidentiality agreement vs nda’ fight?). A Unilateral Non-Disclosure Agreement states that one side obliges not to disclose information. While in the Mutual NDA both parties agree not to do so.

So, in every aspect but the amount of responsible parties, all types of NDA contracts are identical, especially when it comes to the consequences of the breach of nda.

What’s an NDA structure?

As every document, every type of NDA contract must be clearly structured.

For Non-Disclosure Agreements, it is important to answer the following questions:

Thus, NDA can be structured into three main components:

Common NDA mistakes that create loopholes. When does NDA not work?

Law practice would not be complete without the loopholes. So, as it is one lawyer’s job to protect, it can be another lawyer’s job to find and exploit the loopholes that your NDA contract may contain. What’s an NDA loophole? A broad term, an inaccurate name, and some of the other things that, when exploited, may not be deemed by a court as breach of NDA.

Let’s try to cover most of them:

What do you do if your NDA was violated?

It usually does not get to that but...what to do when your sensitive data has been compromised? Since we should not, by any means, recommend gravedigging, let’s see how our NDA may be of help. Here’s what you should do:

How AXDRAFT works with NDAs.

AXDRAFT takes every type of legal document automation seriously, NDAs included. Our team even discussed document automation Myths in one of our recent articles to see if it is really worth the talk. We work with lawyers and businesses from various industries and countries, and we build a dynamic template that covers every NDA variation a business needs.

At AXDRAFT you can:

Did we already mention our legal playbook that can include any number of clauses to add to the text of your Non-Disclosure Agreement? Well, we just did. See for yourself how simple it is:

Does this sound unreal to you? Try our instant demo, which will give you a perfect NDA in 57 seconds.

Summing Up

We now know what is an NDA contract—a document that helps protect a business’s sensitive data, innovator’s innovation, even a chef’s recipe. Non-Disclosure Agreement can be Mutual or Unilateral, but their goal is the same. We also know of the importance of the proper structure of such a document, if we want to be able to enforce it upon the breacher. But only after we perform the necessary investigation and make sure the breach won’t happen again.

Smart stuff aside, NDA’s have become an important part of business’s everyday life in the world that feeds on competition and information. NDA contracts protect our data from being maliciously exploited and ensure that spy games are played somewhere outside your office.

Stay safe and keep your information safe as well!