A nondisclosure agreement can be a good legal document to have if your company has proprietary information that you’d like to protect. It might protect client lists, trade secrets or special processes that you don’t want your competitors to get a hold of.
Nondisclosures are common in business, but there are some mistakes that you could make that would invalidate yours. Avoid these if you want to keep your business’s activities or assets secure.
Listing the wrong party on the NDA
If you put the wrong party name on an NDA, you may be out of luck if they slip information to others. Something as simple as forgetting “limited” or “LLC” in a business name could make the NDA invalid. Be sure to add the legal and trading name of the other party (if it has them). Also, include the other party’s address to avoid confusion.
Your NDA is unreasonable
Your NDA has to be reasonable on paper. For example, a typical NDA is specific about what is or is not confidential. If the NDA is overly restrictive, such as not allowing disclosure at any time after leaving the company combined with a noncompete agreement asking the person to never work in the industry again if they leave your business, then you may have it invalidated in court.
You shared too much information before the NDA was signed
Finally, if you share confidential information before someone signs an NDA, the other party may argue that they had not agreed to keep that information confidential.
These are a few ways your NDA could be invalidated. Be cautious, so you can continue to protect your business.
