When should you require a nondisclosure agreement?

One of the key sources of confusion around nondisclosure agreements (NDAs) for business owners and entrepreneurs is when they should require someone to sign one. Generally, an NDA is warranted whenever someone is going to be privy to valuable and/or confidential information about your company or those who work for or are served by your company that you don’t want them to share without your approval. Generally, NDAs are recommended before you begin discussions with potential:

• Investors
• Partners
• Buyers
• Licensees
• Marketing companies

In some cases, these people and entities will likely need to have private information about your company’s financials. You may also need to share information about an idea or product in development that you don’t want to be public. You need to take steps to ensure that the information isn’t shared with those you don’t want to have it. Businesses often ask employees and contractors to sign NDAs if they will need access to confidential information about the company, its employees, clients and customers. The same is true if someone will have access to proprietary information like trade secrets or ideas and plans for products in development. NDAs protect your privacy and prevent people with access to information about your products from profiting from it or undermining your success as a company. There’s no such thing an effective “one size fits all” nondisclosure agreement. These documents should be carefully crafted so that they meet your needs and will ultimately stand up in court if you need to enforce them or someone challenges them. An experienced Cincinnati contract attorney can provide essential guidance.