The Four Pitfalls to Avoid in an NDA

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A non-disclosure agreement, or NDA, is a contract that one would use to protect their business interests at any time when communicating and disclosing information to a third party.

NDAs should be used so that both parties feel protected and comfortable communicating and disclosing information to one another without harm.

In order to make sure that is the case, there are four important aspects we want to make you aware of that one should always look for to keep your business interests safe.

1. Look out for reciprocity

Some NDA’s may be labeled as a “mutual NDA,” but can still be worded as a one-sided agreement. Check the wording carefully and make sure that you are without a doubt entering into a truly mutual contractual agreement. For more details on this, please check out our dedicated article.

Do not hesitate to nitpick over minute details either. Make the wording in the NDA as specific as you need it to meet your needs. This will help to create clear boundaries cited within the agreement for each party.

2. Clearly identify the information and the purpose of the NDA

Do not sign an NDA with vague clauses in it. For example, if the NDA states that “everything exchanged for the purpose is confidential,” it is genuinely not a workable NDA. The NDA should instead clearly state what is actually confidential. Is it only the information physically marked as confidential? Is oral communication between the two parties also confidential? These things must be clearly expressed in writing.

Likewise, it is important that the purpose of the NDA is also written out. Each party should make it clear what their intentions are in writing so that the other party can hold them accountable per the NDA contract. This should also be as specific as possible, so as not to be left up to any future interpretation.

3. Clearly identify each party and all addressees

The two parties in an NDA should always be clearly identified. However, do not leave your business vulnerable to unmentioned parties in the NDA! This means that if the counterparty wishes to be able to disclose information to other parties, those parties also need to be mentioned within the NDA for them to be able to do so. If you are forbidding the counterparty from disclosing any information to any unmentioned addressee, that should also be written in the contract. Take these extra steps to clarify exactly how the disclosed information you are providing can and cannot be used by the counterparty to keep your business protected.

4. Maintain ownership of your business’ information

You will want to make sure you clearly state within the NDA that the information being disclosed is still owned by the supplying party. Additionally, the receiving party should receive a limited license to the information solely for the purpose at hand.

If the recipient is expected to change, summarize, and/or modify the disclosed information, that should also be written into the NDA. And, be sure to keep your company’s IP rights intact. These things are asserting your and your business’ rights. Again, be as specific as necessary to protect the interests of your business.

How do we keep all of this organized?!

Chances are high that your business has many NDAs with multiple partners that numerous departments need to access specific information from on a regular basis. When your company has such contracts in multiple formats, located in multiple drives and/or filing cabinets, this can easily become overwhelming for even the most well-oiled machines.

Your team deserves to have access to the information they need instantly. And that’s where Zendoc comes in. With Zendoc, your team can take all of the company’s contracts and keep them in one centralized location; ie the cloud. This will allow all team members in every department to be able to access the documents whenever needed.

Zendoc will also allow your team to clearly label all of the important aspects of the NDAs as mentioned above. These labels go in as tags on the file so that they can easily be recalled when being searched for. All of this is designed so that your employees can easily extract key terms to effectively help find & activate data through all documents, no matter the format.

About Zendoc

Zendoc is a full-service AI-powered contract automation system that not only organizes all of your agreements into a single database but keeps you up-to-date on what you need to do to extract as much value from your contracts as possible. You don’t have to worry about forgetting your obligations because you don’t have to remember them in the first place. 

We offer a 14-day free trial demo so you can experience relief from the pain of managing your contracts. Try us today!