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How an NDA can protect your business

On Behalf of | Jul 6, 2021 | Business

When running a business, protecting company property and secrets is a must. One way business owners in Texas can do this is with nondisclosure agreements. What exactly is an NDA, and how can it protect one’s company? 

What is and when to use an NDA? 

An NDA can be used when one wants to have employees keep quiet about certain information and activities — as long as it is not illegal. It is a legal document that, once signed, can be used to hold an employee accountable if the individual shares information without permission to do so. NDA’s are often used when one wants to protect: 

  • Trade secrets 
  • Intellectual property 
  • Discussions with potential investors 
  • Knowledge of sensitive information 

In other words, an NDA is used to protect any information one doesn’t want to be shared with the public or with competitors. Information is power. The ability or inability to keep certain information private can make or break one’s business.   

What should be included in an NDA? 

For an NDA to be legally binding, it must include certain elements. First, it must list the parties involved in the agreement. Second, it must list what information is to be kept confidential and if there are any exclusions. Third, the scope of the confidentiality agreement must be identified. Finally, fourth, the term of the agreement must be included. 

An NDA cannot be overreaching or overly broad. It may not be enforced if the business owner spills their own company secrets. Finally, it may not be enforceable if the damages are challenging to quantify.  

How to enforce an NDA? 

If it is discovered that an employee breached the NDA, business owners in Texas have the right to sue for damages. There are a few ways to go about seeking compensation for any resulting losses. Mediation or arbitration are great routes over litigation if one would rather keep the matter out of court. However, in some cases, filing claims in civil court may prove to be in one’s best interests. Legal counsel can help one decide the best course of action to take and help one seek maximum relief.