New innovative ideas, products, or processes can give a business a competitive edge; however, you will need to ensure that this competitive edge is protected.

For your new ideas to materialise, your new product to be created, or your new processes implemented, you will need to develop relationships with other parties that will require the disclosure of information. How will you protect this competitive edge? By making sure your new idea, product or process is kept under wraps through the use of a Confidentiality and Non-Disclosure Agreement (or “NDA”).  

The Agreement

An agreement that parties enter into situations where confidential information is being disclosed between the parties is known as an NDA. Through this agreement, the parties can stipulate the terms and conditions of the agreement and the duration which applies to the disclosure of information between them.

The agreement, most importantly, sets out what information is confidential or commercially sensitive. The non-disclosure can either be unilateral or bilateral. When it is a unilateral agreement, the one party is the discloser of the confidential information, and the other party is the information receiver. When it is a bilateral one, both parties are both the discloser of the confidential information and the receiver of the information, which can assist with building trust between the parties.

Non-disclosure agreements are essential as they can protect a business and individuals from the theft of trade secrets, intellectual property, or information crucial to the survival of small, medium, and even large companies. In addition to the protections afforded by non-disclosure agreements, these agreements help establish a greater level of trust and confidence between the parties and provides the party that is disclosing the confidential information the assurance that the information disclosed will remain confidential. However, it is of utmost importance that when disclosing confidential information, it is done strategically to maximize the protection afforded.

When conducting business with the assistance of third parties or when procuring investments into your business, new clients or potential business partners for new business opportunities, sensitive information needs to be disclosed. Certain exchanges of confidential information can even be term-based but be cautious when taking part in these types of exchanges. Some businesses have learnt the hard way that certain sensitive information needs to be protected.

It is very risky to release sensitive information about your business or your ideas without the proper protection. This is why some non-disclosure agreements contain restraint clauses which may be enforced in court or through alternative dispute resolutions. However, these are not always appropriate to include and depend on the type of relationship that exists between the parties and the nature of the information being exchanged.

Conclusion

It is vital to ensure that you are protected by an NDA before disclosing any sensitive and confidential information.  

Therefore, it is of utmost importance to consult with a professional for the attention to detail required when drafting an NDA.

Written by Cheralco Worship, Candidate Attorney, Schoeman Law