Every great business or undertaking starts with an idea – and from conception to execution, founders/business owners will need to engage people to create procedures and processes that will bring the vision to life.

In addition to carrying out registration of all the relevant intellectual property, one of the most popular ways to protect your secrets until you are ready for the big reveal is through the use of well drafted Non-Disclosure Agreements (NDA).

WHAT IS AN NDA?

It is a document which sets up a confidential relationship between two parties, whereby one (Disclosing) party reveals confidential information to another (Receiving) party. The receiving party agrees to only use the information as permitted, and also not to divulge it to a third party.

WHY DO I NEED AN NDA?

In trying to find business partners or co-founders, get new clients, key employees/service providers, investors, or consultants to bring your dreams to life, you will find yourself having to reveal some of your private information, either to convince them to work with you, or to enable them to carry out the work you have assigned to them. On such occasions, an NDA will help to do the following:

• serve as proof that there was a disclosure of information
• set out the details of the source and ownership of such information
• stipulate the reason for the disclosure and the appropriate way to treat the information
• limit the ways the receiving party can make use of the information
• prescribe dispute resolution methods in the event of a breach

WHEN DO I NEED AN NDA?

No matter the size of your business, there are certain things you have expended effort into which you would like to keep as confidential and prevent from getting into the hands of your competitors. It is incorrect to think NDAs are for big Companies, as many small companies have been severely affected by avoidable incidents of sabotage, due to careless leakage of their proprietary information and trade secrets.

Typically, many businesses only think about securing their gadgets and equipment, protecting their physical assets, whilst overlooking non – physical assets. It is easy to forget that the safety and success of non-physical assets will generate the revenue to grow the physical assets. You can replace a lost laptop, but you may never recover from the loss of your trade secrets.

HOW WILL AN NDA WORK?

An NDA could just be the triple edged sword you need. First it would prevent your confidential information from getting out, secondly it could be all the proof you require if the receiving party decides to breach confidentiality, and finally, it would also help you prevent, sue or defend lawsuits from former employees or service providers who may try to get a piece of the pie after you have achieved commercial success.

There are various forms of Confidentiality and Non-Disclosure Agreements, and whilst there are standard clauses which must be present in every one, each must be drafted based on your peculiar situation. An NDA for a key employee who can easily set up his own competing company with your information will be different from the one with your technology service provider.

In conclusion, not all dealings are confidential, and not all information will be protected by an NDA – a simple clause in the terms of engagement would suffice sometimes suffice. As usual, you are advised to seek legal counsel for your specific situation.

This article provides general knowledge on the subject matter discussed and is not meant to be all-encompassing legal advice for your specific situation. Furthermore, technical details have deliberately been avoided in the hopes that we keep it simple and ensure non-lawyers truly benefit from our content. For further inquiry, please send an email to lawyerinlagos@gmail.com or lawyers@syntaxlaw.com.