What is a Non-Disclosure Agreement?

If you are working with a new customer or client you may be asked to sign a non-disclosure agreement. You may be asked to sign a Non-Disclosure Agreement, which is often referred to as NDAs for short. In Wisconsin, Non-Disclosure Agreements NDAs are used in a wide range of settings. A party may want to protect customer information, product plans, and trade secrets. An NDA provides ensures secrecy by providing legal remedies if the confidential information is improperly disseminated. 

What’s an NDA?

A nondisclosure agreement is a contract that creates a confidential relationship between a person who holds a trade secret (or other confidential information) and a person to whom the secret will be disclosed. A party to an NDA promises not to divulge or disclose information shared with them by the other party. If the party violates the agreement, the injured person can assert claims for breach of contract and seek monetary damages or other relief. The type of information covered by an NDA can be expansive and depends on the needs of the parties. Information commonly protected by NDAs might include client and customer information, new product designs and schematics, trade secrets, sales and marketing plans, and new inventions.

NDAs protect sensitive information. If the information is leaked, the injured person can claim that you breached the contract.

What should I do if asked to sign an NDA?

If you’re asked to sign an NDA upon entering a new business relationship, it’s usually because the individual or company that you will be working with has no way to determine whether you will keep their confidential information secret. NDAs are just part of doing business and should not be viewed as personal.  Asking you to sign a legally binding document is one of the most common ways that companies seek to protect their confidential information.

You should understand the terms of the non-disclosure agreement before signing the agreement.  Typically, NDAs contain provisions covering the following components:

  • Definitions of confidential information
  • Obligations from all involved people or parties
  • Time restrictions

What information is considered confidential?  Definitions of confidential information spell out the categories or types of information covered by the agreement. This section can lead to problems where the terms are general and overly broad. This provision should be made as specific to the situation as possible.  You should ask for clarification if you are not sure whether the other party intends for information to be confidential.

How long am I am prohibited from mentioning this information?  NDAs often have time restrictions.   The party receiving the information must maintain the secrecy of the information for the time-restricted period. The non-disclosure period may also sunset after a certain period or upon completion of a certain event. For example, if you are working on product development the confidential material may cease to exist once that product is brought to market.

What constitutes a breach of an NDA Agreement? 

NDAs explicitly spell out that the person receiving the information is to keep it secret and limit its use. This means you cannot breach the agreement or encourage others to breach it.  A breach may be incidental or intentional. For example, if you’re working as a consultant, contractor, or a supplier, you might want to consider some other issues

  • Can I list this person or company as a client on my website or professional profiles?
  • Am I allowed to include this company and project on my resume?

Regardless of the circumstance, it’s important to read through any document before signing. If you have any questions about what’s contained in a Wisconsin Non-Disclosure Agreement, Murdock Law is here to help.

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