Most of us since childhood have faced this situation. Had there been an instance when you did not tell something even you know it as you have been asked to do so? Feeling confused with the above statements? No need to and I will tell you. Yes, we had kept secret and not disclosed many times in personal life. The same when done in the outside world we need to legally execute a document.
This document is called an NDA/CA/CDA/SA/PIA. Non disclosure agreement/ confidentiality agreement/confidentiality disclosure agreement/secrecy agreement/proprietary information agreement. It can be referred by different name, but the base is, it is an agreement made to maintain secret between the parties who mutually agreed and signed the document.
Ok, let me now tell you what you can expect from here. We can help you with a different kind of NDA agreement for your business. Simply download and enter your personal details to execute this agreement. Off course they are for free.
Come we will start with some basic understanding of an NDA, then we have answered many questions to clear your doubts and finally explained about the two most used NDA. First, let us have a look at few of NDA form types.
Contents
Types of NDA Templates Format
Let me now write a sample agreement with the same words used in a legal agreement for your reference.
| Mutual Non Disclosure Agreement
This NDA is executed by the (“Disclosing Party“) Name _______________, located at _______________ (“Receiving Party“)Name _______________, located at _______________ for the purpose of checking the illegal revelation of confidential details as mentioned below. Both the mutually agree and enter into a confidential relationship> 1. Definition – Confidential Information according to this agreement means all the information and materials that have commercial value. All the written details with a seal confidential must not be revealed. Any detail orally told with a mention confidential must also be maintained as a secret. 2. Exclusions – Receiving Party’s duty under this NDA must extend to information which is Known publicly, identified by the Receiving Party before exposéd by the Disclosing Party, is disclosed only after taking necessary written approval from the Disclosing Party. 3. Obligations – The receiving party must maintain secret strictly for the benefit of the Disclosing Party. Never the receiving party should reveal anything for their personal benefits. 4. Time Duration – The agreement is valid until the disclosing party mentions the same or the receiving party has written confirmation for revealing. The termination of the agreement is purely under the discretion of the disclosing authority. 5. Relationship – No part of this Agreement can be considered to form either party a joint venture for any purpose. 6. Severability – Under the law if it is found that any portion of the Agreement is invalid then rest of this Agreement also shall be terminated. This Agreement obligation is bound on the representatives and successors of the party. Both parties have signed this Agreement with a witness who is a common person and not involved with the business in any manner. Party 1 – Disclosing Party Sign _____________________________________________________ Name ___________________________ Date: _______________ Party 2 – Receiver Sign _____________________________________________________ Name ___________________________ Date: _______________ Party 2 – Witness for Disclosing Party Sign _____________________________________________________ Name ___________________________ Date: _______________ Party 2 – Witness for Receiver Sign _____________________________________________________ Name ___________________________ Date: _______________ |
Employee Non disclosure Agreement
Make sure the employee NDA contains the following details.
- Purpose of the contract – The reason for employment, potential sale or any new invention.
- Protect Information to be included – Software and technology, client information, accounts details, intellectual property rights etc.
- Signing Parties – Name, contact details, and complete address. The name should include the signing party name and their father’s name.
- Contract Validity – Minimum 1 and a maximum of 5 years.
An NDA is required to be signed by every employee who accepts an offer. It is because each company will have a policy of not letting out a few information. Even a small company might want to protect their details from the competitor. So it is good to get a signature from the employees to save information. Also, it will be a moral and legal binding that employees will know their limitations.
The NDA for an employee can also include a term that the employee should not join the immediate competitor after leaving the company for a minimum some time. This will help the organization to safeguard its details soon after the employee leaves. The company can decide to list such companies to be very specific.
Software Non disclosure Agreement
It is important that software codes are protected and hence apart from a usual employee NDA, every software company should make software NDA. Use the template given here to use for your software business. Also, take some time to understand how the NDA helps in protecting the software source code.
There are two types of source codes namely the open source and proprietary. For better understanding compare Apple product and Linux. The former is proprietary code and the latter is open source. The company Apple has purposely created its proprietary code not letting others steal their codes. On the other hand, open source codes can be accessed, and modified by any common person.
Intellectual property rights will help to protect the proprietary source code. Therefore an NDA is required to protect the software source code theft. It can be a unilateral agreement or mutual and let us see what details will be required to make a software NDA.
Confidential Information – Source Code
The basic confidential information in a software NDA is the source code. Make it clear that the party who accesses the source code must not copy or transfer or reveal it to others in any form within or outside the company. Also, other details like design details, marketing materials, customer list etc can be covered under confidential information. Clearly, let know who can be shared with the details and who cannot. This cannot be generalized as the employee needs clarity in using the details.
In case of fear of source code theft by freelancers, then describe the algorithm and the functionality as confidential information instead of just stating source code.
Obligation
For these kinds of details, there is no need to make an obligation clause. But give an overall definition by covering all the details associated with the end product.
Stop Source Code Disclosure
Make it clear that none of the details including algorithm, design, source code and everything related to the product design to be disclosed to the third party in any situation.
Should not use the source code
It is important to let know the employee not to disclose the source code. At the same time, it is equally important to not use the source code in other projects in any form.
Copying and Storing code is prohibited
Even saving the code or publishing it on the internet must be avoided. It should be even handwritten or photographed. These clauses must be explicitly stated in the NDA.
Also, give details about the right to transfer and governing law. These details will allow the receiving party to have a clear understanding. Ensure no rights to be taken for granted.
What Is Non disclosure Agreement (NDA)
NDA is a legal contract made between people who hold confidential information about the business. When the parties sign the document they are bound by law and must not reveal the details. In case of failing to maintain confidentiality, then they can be sued. The three key functions of an NDA are mentioned as follows.
- Sensitive information is protected by signing an NDA
- The patent right is preserved with the help of the CA
- Each individual will know their right to share information and can understand their limitations
Why Is NDA Important
Before I tell you the importance of an NDA let me tell you the places where NDA is used. From that, you can understand the need for an NDA. It is used in companies where employees are expected to maintain secrecy about their business model and clients. People who work in the medical field must agree not to disclose any health condition of one patient to another. All those who work in manufacturing firm should not reveal their process to the competitors. Likewise, every organization and business will demand workers to retain secret about the company to themselves and not talk to the outside world.
Now, it is clear that an NDA is important to be executed to make sure that people are bound to law and will not reveal any details to others. In the case of oral promises, there are chances where people will not stick on to. Hence written agreement that is signed will have a legal binding and maintaining confidentially is 100% assured.
Structure Of NDA
Let us now see how an NDA will be structured and what are the basic elements of an NDA.
Heading – There is no rocket science in giving a heading for an NDA as it is simply written as a Non disclosure agreement. You can also extend this further to the Mutual Confidentiality Agreement when both parties are signing a partnership deal etc. The first heading is one side where a company decides the employee must agree. The second one is mutual consent and both parties will discuss and add points to the agreement.
Parties Details and Date Instead of mentioning date and name as we do in invoice templates, here we will write in wordings as follows. This agreement dated ( ) is effective from ( ) is executed between the company (company name, contact details) and the employee ( name and contact details). Here you will mention the date when the agreement was made and the date from when it is effective. The parties identification is mentioned. Also, if there is any act in legal terms you can specify them. Per the company act etc.
Purpose This section will explain the purpose of the NDA. The reason behind making this agreement etc.
Scope – You can list all the details you think needs to be maintained as secret. There are details which can be orally disclosed but not given in writing. Like sharing the company details via email is prohibited. But, you can talk to friends about your nature of the job and that is not harmful. Similarly, there are places where you can even talk about confidential information to anyone. This is typically when your company quotes tender and you know that. Also, there are details which you also should not access will have a different confidentiality agreement. So if you are executing an agreement to any company ask them what needs to be done and then draft the same.
Exclusions – Here the party will be explained about what is the kind of details considered as exclusion from the agreement. Also, when some details can be disclosed. Who are all excluded from knowing the details etc. This section will fully explain the time, situation, context and person who can be excluded.
Agreement Terms – The validity of the NDA is the most important term. It cannot be an open-ended agreement.
Optional Details – Several another clause like the relationship, severability, integration, waiver etc can be mentioned.
Signature and Witness – Finally, have space for the signature of both the parties as well as a witness for both parties.
NDA – FAQ
- Is A Non disclosure Agreement Legally Binding?
Yes, they are legally bounded provided they are not exhaustively broad if the duration is indefinite, too demanding, and not in favor of public interest. In short, it has to be written abiding by the law based on the country where the disclosing party resides.
- Can You Make Your Own Non Disclosure Agreement?
It is a legal document however; one can make a Non disclosure agreement. But the structure and wordings must be referred and good to consult a legal person. Alternatively, pick templates from this page.
- How Do You Write A Confidentiality Agreement?
You can write the confidentiality agreement by referring to the above sections described in this article. Also, check wiki link for a detailed guideline
- Who Is The Receiving Party In A NDA?
A non-mutual agreement is an agreement written by one party and the remaining party who sign and agree are called the receivers. Here an employee is a receiver. For that matter, anyone who signs will be called the receiver.
However, in a mutual agreement, one or more parties will discuss and draft an agreement. Here all the parties are both disclosing and receiving the party.
- Do Both Parties Have To Sign NDA?
In mutual NDA it is a must that both parties sign the agreement. Whereas, in a non-mutual NDA the receiving party must sign in front of the disclosing party. But the disclosing party need not sign in front of the receiving party.
- Is An NDA Legally Binding?
Yes, NDA is legally bound to the law based on the country the disclosing party resides.
- How Long Can An NDA Last?
It can depend on the clause mentioned in the agreement. Standard terms will have 2, 3, or 5 years.
- Does NDA Expire?
Terminating NDA means it gets expired after a mentioned period. But a non-terminating NDA will never get expired and only it has to be made obsolete if the disclosing party deviates from the clause. Also, it gets expired if the receiving party leaves the organization etc
- Do I Need An NDA With My Attorney?
It depends on the NDA purpose. If for a job or any other usual NDA, then you can sign after thoroughly reading and an Attorney might not be required. But when you are signing any business partnership and other NDA that might put you in a tricky situation, then you must consult an Attorney.
- Can NDA Be Perpetual?
If an agreement is perpetual, then the receiving party must not reveal the secret forever. Until and unless any trade secret or any life is involved only then this NDA is valid. Otherwise, a lifetime NDA might not be valid in court.
- What Happens When You Break A NDA?
Based on the terms mentioned in the NDA you are liable and the disclosing party can take action on you. It can be legal as well.
- Can A Non disclosure Agreement Be Broken?
It can be broken if both the disclosing and the receiving party mutually agrees. Also, by reading for any exclusion in the agreement the receiving party can break the NDA. Defend against the breach of contract lawsuit.
Bottom line
Protect your company details by making a Non disclosure agreement. Do not think twice to use these templates for free. You can personalize by simply entering the contact details, and signing. Allow the receiver to read and understand before signing. Make it clear that the NDA is legally bound to law and action will be taken if not sticking to the same.
The disclosing party must also remember not to force anything in the NDA which against law. Especially an indefinite NDA cannot be used everywhere as the court will not have control on that clause. So it is a good practice to consult legal professionals when you want to make NDA that involves trade secrets. For normal employee and software NDA, you can use these templates.
