In many areas of business, contracts form the basis on which a company executes its plans and achieves its goals. Without effective contracts in place, a company’s ability to protect itself and to succeed may be compromised. Nondisclosure agreements, also referred to as confidentiality agreements, are one type of contract often considered essential in allowing a company to conduct business.
Many people think of nondisclosure agreements as contracts that aim to keep select information secret or confidential. While this is true, Forbes explains that NDAs do far more than simply restrict the sharing of select information. A good nondisclosure agreement also prevents the confidential information from being used against the company that must share it. The best NDAs outline several things including what information is to be considered confidential and that resides within the scope of the contract. The agreement should also detail the duration of the contract and the conflict resolution path in the event that any issue later arises.
Companies may request that select employees sign nondisclosure agreements. Vendors who need to understand sensitive business strategies and details may also need to sign these contracts. Nondisclosure agreements can be used to protect a range of data including that relating to a company’s products or services, technology, processes, sales and marketing, revenue and finances, and more.