WHY NON-DISCLOSURE AGREEMENTS ARE SO IMPORTANT AND HOW THEY FUNCTION

MEANING NON- DISCLOSURE AGREEMENT.

A Non Disclosure Agreement, also generally called  ‘Confidentiality Agreement’, is an agreement wherein the parties agree to share the confidential information/data which is specified in the ‘Confidentiality Clause’ of the Non-Disclosure Agreement. The parties to the Non-Disclosure Agreement also agree not to disclose such information to the third party beyond the terms of the agreement

GOVERNING ACT OF NDA

A Non Disclosure Agreement is governed by the Indian Contract Act, 1872 and according to it, a Non-Disclosure Agreement (NDA) is a legally binding contract. To ensure the further validity and enforceability of the Non-Disclosure Agreement, it is suggested to stamp the NDA.

OTHER NAMES FOR NDA.

• Confidential Agreement (CA)
• Confidential Disclosure Agreement (CDA)
• Secrecy Agreement (SA)
• Proprietary Information Agreement (PIA)

ADVANTAGES OF ENTERING INTO NDA

COMPANY IMAGE PROTECTED

One of the main reasons why NDA is signed is an image. There are plenty of companies that are reluctant to admit to their customers and stakeholders that they had to use somebody’s help in creating a product. Indeed, almost any big company you know outsources these or those services, but only a few of those are ready to speak about it in public.

Besides, if there will be any negative publicity associated with your contractor, it would never influence your image, since your cooperation will never go public.

On the other hand, if your business is not connected with software development, there is nothing for you to worry about in any of these cases.

• PERSONAL DATA SECURITY

One more good reason to sign an NDA is to provide total security for the data you provide to the contractor. Though the majority of outsourcers would have never used it anyway, in case the data are extremely important for your business, e.g. price strategy, financial reports, it is better to go and protect yourself and sleep tight.

• TECHNICAL SECURITY

Not so explicit advantage of nobody knowing who developed your product for you is technical security. It is quite evident that the same developer uses a common approach to all products he develops. I.e. if one of those will be hacked, IT criminals might find a way to hack all products developed by that developer.

But if you signed an NDA, they will never know about you and your little product.

HOW NON- DISCLOSURE AGREEMENT WORK.

An NDA is typically put to use any time that confidential information is disclosed to potential investors, creditors, employees, advisors, clients, or suppliers—or any other stakeholders that need access to the company’s confidential information.

Having confidentiality in writing and signed by all parties can lend trust to these sorts of negotiations and deter theft of intellectual property. The exact nature of the confidential information will be spelt out in the non-disclosure agreement. Some NDAs will bind a person to secrecy for an indefinite period so that at no point in time can the signer divulge the confidential information contained in the agreement. Without such a signed agreement, any information disclosed in trust can be used for malicious purposes or be made public accidentally

WHEN TO SIGN A NON-DISCLOSURE AGREEMENT?

There are various events or circumstances under which an NDA shall be entered into and signed. A few of them are as follows:

•  into a business deal,
• While taking expert’s advice on a new product,
• while starting a new project,
• while investigating a possibility of investment with another party,
• while providing employment,
• while signing a contract worker for a sensitive project,
• while dealing with sensitive client information,
• while discussing commercially sensitive information with another party, etc.

CONCLUSION

As now people are getting more about entrepreneurship ideas and indulging in more innovative ideas In these kinds of situations NDA can be very full for new emerging business groups. As NDP protects the idea from being disseminated. Confer their rights and ideas to limited people and companies and build trust between people. Give a clear vision of what is confidential as the clauses are mentioned in NAD is expressed without any ambiguity. It’s a clever step to bind parties legally and as penalties are mentioned in the agreement the breaches or infringements are accordingly dealt with. The dispute can be referred to the Arbitrator or even taken to the court if the level of violation demands. It’s up to the parties of the agreement where they want to take them ahead.