Non-Disclosure Agreement or NDA, what is it?
Non-Disclosure Agreement, or simply NDA, has come to the fore in the world of Startups and entrepreneurs. We could translate it as a confidentiality contract or agreement and, essentially, it seeks to ensure that the information shared between two or more parties is kept secret between them and with the sole aim of fulfilling the purpose for which said information was shared.
It is therefore normally a common tool in the initial stages of any business project, as it is not sufficiently consolidated or protected by other means (intellectual or industrial property), and this confidentiality commitment regarding the shared information must be signed.
What does a Non-Disclosure Agreement or NDA contain?
Like any contract or private agreement, the final content will depend on the desires of the parties, and any search for the term NDA in the most common search engines, returns a multitude of models. But how do I know which one suits me if I want to protect the information I share?
To solve this question, it is important to be clear about where the value of your project or business idea lies: it may be that the value is in the brand or image, in a program or app prototype, or in the content of a database of prospects. As I said, there are any amount of NDA models, so be clear about where the strength of your project lies and emphasise this when you write or decide to use an available NDA model.
At this point, it is also wise to consider the parties with whom you are going to share the information. One thing is a possible minor collaborator required to develop your project and another a potential investor with the actual capacity to develop it on their own. As a small business owner or entrepreneur, it may seem pretentious to take an NDA with you, but overall,
In general, an NDA will contain:
- The identification of the parties, the Issuer being the owner of the shared information and the Recipient the one who receives it. There may be a multitude of issuers and recipients, depending on each case.
- Recognise the confidential nature of the information shared, which may include, among others, business strategies, access to databases, computer programs, financial data, etc.
- The recipient will essentially limit him/herself to accessing said confidential information for the purpose of the relationship with the Issuer, assessing a possible investment, collaboration or provision of a service.
- Limit access to confidential information to the minimum number of personnel necessary to fulfil the aforementioned purpose.
- Obligation of the recipient to return and / or destroy confidential information whenever requested by the issuer and, where appropriate, when the purpose of the legal business has been fulfilled.
- Penalties in case of breach of the duty of confidentiality, in addition to any damages that said breach might cause. Regarding this, it should also be borne in mind that the Trade Secrets Act (in Spanish, Ley de Secretos Empresariales) establishes that, in the event of a breach of trade secrets, the affected party may claim damages, including loss of profit, as well as moral damages.
- Usually, the duty of confidentiality goes beyond the time necessary to have access to the sensitive information of the issuer; terms are usually established as of 2 years.
In short, the NDA is a useful tool when strategic information on a project or company is to be shared with third parties. A good NDA can save you some displeasure in case of inappropriate or planned uses of said information, which in many cases is the essence of your project, so it is advisable to spend a little time choosing or writing an NDA that really suits your situation.
If you have any doubts about this or any other issue, please contact us!
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