A Non-Disclosure Agreement (NDA) is a legal document that you will probably encounter at one point in your career or when you plan to work with different business owners. You will be asked to read an NDA and provide your signature in agreement to it.

Most people will feel intimidated by this document’s content, as it is written with very precise legal terms that we don’t usually use or hear in everyday conversations. And because of this, many of us will happily agree to sign this legal document before we even know what is actually written in it.

There are some factors to consider and identify before you voluntarily sign an NDA. Once you are aware of these, you will have a far better understanding of the document before you agree to the conditions indicated in it. First, let us define what an NDA is.

What is an NDA?

A Non-Disclosure Agreement is a legal document that establishes a confidentiality agreement between two or more parties. This simply means that with the agreement of both parties, certain pieces of information that are identified as confidential are not allowed to be discussed or disclosed to others outside of the NDA. There will also be agreed consequences if the agreement is broken.

NDA’s are for Maintaining Confidentiality in Business

There are many reasons why businesses decide to require employees or business partners to sign NDA’s, but the underlying reason for it all is to confirm that employees will not disclose important and confidential information that’s crucial to the identity and structure of the business. As an example, if a bakery has a secret recipe that has catapulted its success, an NDA will guarantee that the employees will not share or disclose this piece of information with anyone outside the agreement. Businesses have NDA’s to protect valuable information, in turn ensuring their success.

In software development, an NDA can be signed by a software development company that’s responsible for developing a company’s business software or app. The NDA ensures that the software development company keeps everything they learn about their client company confidential.

Things to Look for when Signing an NDA

The following are the five key elements to identify when reading a Non-Disclosure Agreement.

Identification of the parties

All well-written NDA’s will distinctly identify the parties involved in the agreement. It will provide a specific description of the parties involved. If you feel as if the description of the parties is too vague or that this raises questions on who exactly is part of the agreement, then you should withhold your signature and require a more specific description. This will protect you as it provides specific and precise information on who can receive the information protected by the NDA.

Definition of what is deemed confidential

It is also extremely important that the agreement accurately describes the information that is considered confidential. This is because in a business scenario, there is a lot of information that’s shared between different employees and partners. If the information that’s protected by the NDA is described too vaguely, then a wide variety of information can fall under the description’s umbrella, and you might find yourself unintentionally breaking the agreement and suffering the consequences for doing so.

The scope of the confidentiality obligation by the receiving party

In an NDA, the receiver of the information has two obligations: to keep the confidential information confidential and not use the confidential information itself.

It’s important that you read this piece of information thoroughly to understand what actions are prohibited when it comes to using the information being protected.

The exclusions from confidential treatment

These indicate the different situations in which it is fair and sound to allow the disclosure of information without punishment or consequence. A good example of this is if the protected information has already been identified and leaked to the public by another uninvolved source. It isn’t fair to punish the parties for discussing this with others, as it is already out in the open.

The term of the agreement

This refers to the agreement’s period of effectivity.

Conclusion

Non-disclosure agreements ensure the confidentiality of information between two entities that do business together. Whether you are the one providing or signing the NDA, ensure that the agreement clearly and specifically indicates the type of information that should be kept confidential.

When working with a software development company to create the software solutions for your business, an NDA ensures that the software development company you work with keeps all the information they gathered about your company confidential.

When you work with us for your software development needs, you are assured not only of high-quality software applications; you are also assured that all your business information is protected.

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