Back to Blog

Nondisclosure Agreements and Small Business

 The Law Office of Peter Stanwyck assist business clisents with drafting Nondisclosure Agreements (NDA) tailored to the specific situation and to review NDAs that clients are asked to sign.  Link To NDA Legal Services



Small Business Owners may require a Nondisclosure Agreement (sometimes spelled Non Disclosure or Non-Disclosure) to protect confidential information or may be asked to sign a Nondisclosure Agreement by another business seeking to protect its confidential information.


Examples of situations where Nondisclosure Agreements and may be used:


   NDA’s are typically used between sellers and buyers of businesses by both to protect the confidential each provides the other. 


  NDAs are often used by business owners to prevent employees and contractors from disclosing confidential information. 


  NDAs are often used by businesses to protect confidential information that is disclosed to vendors as part of the bidding process. 


  NDAs are often used by potential partners and joint venturers to protect confidential information that may need to be disclosed while they are courting each other.


The intention of an NDA is to keep the recipients of confidential information from disclosing it to others or for using it themselves for purposes other than the specific reason for which it was disclosed.


There are numerous, often free, NDA’s available on the internet.  Just GOOGLE: Form Non-Disclosure Agreement.  And it is possible for a form NDA to meet the needs of both the party seeking protection and the party from whom protection is sought.  But, all NDAs are not created equal, some are inadequate to the task, some over-reach and demand too much and only some are just right.  I acknowledge that as a business lawyer my advice can be viewed with suspicion  that you should avoid forms and  have your lawyer prepare or review a NDA whichever side of it your on. If the confidential information is worth protecting, it  is worth protecting correctly and while a form NDA may  be better than nothing, better than nothing may not be enough.  Similarly, if you are asked to sign such a document, it may significantly and unreasonably restrict your future choices and it should be reviewed before signing.


Unless the NDA is a highly technical document, covering a complex situation and over issues of substantial financial value, I would expect the typical NDA for a small business situation to take about an hour of legal time, including the time spent in advance talking about it.


An NDA cannot achieve turning information which is already public information into proprietary confidential information by simply declaring it to be so.  So for example if a business publishes its customer list on its website or its otherwise the list is not kept secret, it can’t then declared to be confidential as a way to keep a former employee or contractor from contacting those customers.


If the two businesses signing the NDA are in different parts of the country or world there may ne no more important provision in the document than which jurisdiction it will be enforced in.  Having to go to a different jurisdiction may make it impractical for one of the parties to either make or defend a claim that an NDA was violated.


Those agreeing to abide by an NDA should avoid putting themselves in a position where the NDA would limit choices they would otherwise have had the information not been disclosed.  For example a Chocolate Cake recipe disclosed under a NDA to a cake baker.  That baker still needs to be able to bake chocolate cakes with using other recipes, or if the disclosed recipe is itself known to the public then that baker should be able to use it, notwithstanding the NDA.


Finally, your lawyer or an attorney you are consulting with to becomce your lawyer already owes you a strong duty of confidentiality, and you do not need to have a lawyer sign an NDA .





Disclaimer: The material  in this blog does not constitute legal advice, does necessarily reflect the opinions of the Law Offices of Peter M. Stanwyck or the author of the material if not Peter Stanwyck and is not guaranteed to be correct, complete, or up-to-date. Consult with a qualified attorney to address the specifics of your circumstances.



Posted 06 / 19 / 2012


post comment

The comments are closed.

No comments yet