Development in trade and commerce also requires the equal protection of rights to the extensive possible extent. A Non-Disclosure Agreement surely does the same by protecting valuable information of any company or individual from being leaked or used against him for the purpose make loss to the primary party or holder of the information. To keep an upper hand, it is essential that an organization must continue working on innovative projects, creative thoughts, and energizing reforms in their business but there’s always an underlying fear that their trade secrets might fall into the hands of their competitor. Similarly, startup companies with a new and profitable idea can only succeed if what their working remains under enfolds. A Non-Disclosure Agreement is a legal document that keeps the cover on such sensitive information. NDA acts as a defender of original ideas or models or any kind of information which is profitable or important to its owner. These agreements might be referred to on the other hand as Confidentiality Agreements (CA), confidentiality statements, or secret clauses, inside a larger authoritative report.
WHAT IS NON-DISCLOSURE AGREEMENT
A Non-Disclosure Agreement (NDA) is a legitimate contract between at least two parties that denotes that a classified relationship exists between them. The classified relationship exists on the grounds that the parties share data among themselves that ought not to be made accessible to some other parties outside of those included, for example, competitors or the general population. An NDA may also be referred to as a Confidentiality Agreement.
The Non-Disclosure Agreement which is otherwise called confidential disclosure understandings or confidential agreements or contracts of secrecy, are those agreements which get signed between two organizations or individuals under which one party has to maintain secrecy as to the content of the documents and if the party violates the terms then the other party can sue him for the damages suffered because of the disclosure the confidential information of the other party within a specific period of breach of confidentiality. They can be broadly divided into two categories, firstly Unilateral Non-Disclosure Agreement, which comes in when only one party is disclosing some confidential information to the other. Secondly, Bilateral Non-Disclosure Agreement, which comes in when parties on both sides are releasing private information to each other for performing the contract. Former only obliges one party who is receiving the information whereas in latter case both the parties are compelled to protect the information as prescribed in the agreement.
WHAT CAN BE PROTECTED?
Any information can be protected by a Non-Disclosure Agreement other than information that is already available for the general people on public platforms. It ensures secrecy of data like an idea for new restaurant, a company, and any kind of private business data that could be of value to others and taken advantage of if not protected. An NDA generally lays the boundary within which the information may be disclosed. The nature of information that comes within these boundaries is that of intellectual property which includes copyrightable material, potentially patentable inventions, trade secrets, formulas, processes, compositions, compounds, plans, blueprints etc. Any leakage of such information especially trade secrets have capacity to do an irrevocable damage to a company. NDA usually comes attached with a non-compete agreement in employer-employee relation, the employee cannot disclose the information not only during the period of employment, which is done to ensure the protection not during the course of employment but also after the employment.
USES OF NON-DISCLOSURE AGREEMENTS
Business owners often need to discuss proprietary or sensitive information with outside individuals. Sharing data is essential when looking for investment, discovering potential partners in a business, acquiring new customers, or contracting key employees. Keeping in mind the end goal to secure the individual or individuals with whom this data is shared, Non-Disclosure Agreements have for quite some time been a lawful structure to keep up trust and keep that data from disseminating where it could undermine the profitability deep-rooted to that content. Information that may require NDAs include secret recipes, proprietary formulas, and manufacturing processes. Ensured data also ordinarily includes customer records, lists of sales contacts, non-open accounting figures, or a particular thing that separates one organization from another.
A Non-Disclosure Agreement can be used by any multinational corporations, small companies, partnerships, individuals and most importantly to start-ups or individual who wants to secure their ideas or information from being misused. Since all of them have to indulge in transactions with outsiders and entrust their confidential information to them in the course of business. A start-up can be anything it can be an idea or business model, but the problem with the start-ups are that it cannot be kept locked up with the owner, the owner has to explain it to an outsider for its further development and investment. So, to protect that information shared with an outsider from being misused, a Non-Disclosure Agreement is signed with those outsiders to ensure that the information is not disseminated or used for another’s benefit risk the interests of the owner. Similarly, NDA can be used by all industries especially those which are specifically involved in intellectual creation.
EXCEPTIONS
A Non-Disclosure Agreement ensures that your information stays safe and is not given out, but there are some exceptions to this, for instance, any person who is under an obligation to keep the data a secret, might be required by a Court of law to reveal it for the sake of justice. When this condition arises, the lawful order of the Court shall prevail over the obligations imposed by the NDA.
Also, if the person is already in possession of any such information and eventually obtains the information from another source, he is not bound by NDA not to disclose such information to any other party and matter of policy and national security will also override the NDA.
VALIDITY
In India, a Non-Disclosure Agreement is valid and can be enforced only when it is registered under the Registration Act, 1908. As general rule states that a legal instrument, document or contract has value only if it is capable of being enforced in a Court of law. Therefore, in order to enforce NDA, it is necessary to register under sub-registrar of district or city along with the required stamp duty which varies from state to state.