Ah yes, the Non-Disclosure Agreement. Most commonly referred to as the "NDA," this agreement has caused a universal paranoia amongst entrepreneurs. It's the agreement that every entrepreneur needs in order to ensure their idea is protected when dealing with anyone who can help them turn their dreams into a reality!
NDA in a Nutshell
For those of you who are not sure what an NDA is, it is essentially an agreement that states one or both parties will not use or share any of the information that is exchanged for a set period of time.
Types of NDAs
NDAs can come in one of two forms, Mutual or Unilateral. In a Mutual NDA, both parties are exchanging information with one another and agree to keep everything confidential. These types of NDAs are used mainly in mergers where a large amount of classified information is being shared in order to come to an agreement.
The other type of NDA is the Unilateral NDA. This is the one that every entrepreneur has in hand before they go and speak with third parties to help them turn their idea into a reality. In this agreement, only one party is sharing the confidential information. The other party agrees not to misuse or disclose any of the information they are given while working on the assignment.
Nowadays, with such easy access to information, anyone can go online and download an NDA to use, and most times it will be sufficient to achieve your goal. However, we have been presented with NDAs that lacked some of the four basic elements an NDA needs in order to be effective.
Before we get into the elements, we strongly advise using the LegalStart app before acting on or signing any type of document. We agree that some attorneys are a bit out of touch with reality and want to charge ridiculous fees for something as simple as a basic NDA.
We do not believe an attorney should charge their startup client for an NDA. Unless of course, it is the type of situation that requires a more complex NDA.
This is why, at LegalStart, all new Members get a FREE Non-Disclosure Agreement just for signing up!
Now for the elements:
1. Defines what is Confidential Information
The NDA should clearly define what information needs to be kept confidential. The last thing anyone wants is ambiguity in this agreement. It is important to make sure this is clear because the parties may later disagree in what actually constitutes “confidential information.” A clear definition will avoid any confusion.
2. States what is NOT Confidential Information
Not everything exchanged can be considered confidential. A good NDA will have a list of things that will not be considered "confidential information". Usually, any information that can be obtained independently or that falls into the public domain will not be considered confidential for the purposes of the agreement.
3. Lays out the Receiving Parties Obligations
A good NDA should state what the party who is receiving the information is expected to do or, better yet, not do. Generally, it is sufficient that agreement states that all the information must be kept confidential, that it must not be misused, and it must not be disclosed to any third parties.
4. Defines a Time Period
In order to avoid any complications in the future, an NDA should separately define the time period for the agreement (usually called a “Term”) and the amount of time for which the information should remain confidential. These time periods may not be for the same amount of time, and as such, should be stated separately and not grouped together as one.
We understand that protecting an entrepreneur’s idea is extremely important, which is why we want to ensure that yours is protected. Many successful companies have been founded on a “stolen idea,” including the multi-billion company, Facebook. We want to ensure that the success goes toward the person that truly worked for it.
When you have an idea that will change the world, you deserve assistance from an app that will guide you from idea to funding.
The difference between us at LegalStart and other options is that we offer counseling that will propel you toward your dream.
When you are looking for guidance, rely upon people that have been in your position before and understand the struggles of starting your own business. We believe in empowering entrepreneurs by providing a basic NDA, where you are protected and can focus on driving your business to the top. We wanted to create this platform to defend your business from those that want to obtain your idea and steal your spotlight. Ensuring that your money goes toward what matters and protecting your idea will always be our priority at LegalStart.
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