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The benefits gained from non-disclosure agreements

On Behalf of | Jan 12, 2022 | Business Law |

A potential lucrative business opportunity has come to your company. It involves teaming with another firm and could lead to a vast growth in market share. It makes sense to pursue this partnership, but you must take a calculated approach with solid research before doing so.

This also represents the time to turn to a critical tool known as a non-disclosure agreement. Such an agreement establishes a confidential relationship between companies and other parties who work for you. It protects your business and personal information, allowing your company to work with another company without fearing that essential materials wind up in the hands of the competition.

Protects sensitive company information

The main benefit of a non-disclosure agreement is that your company’s sensitive information remains secret. Such information may run the gamut, ranging from research and development, business plans and patents to finances and negotiations.

This legally binding agreement clarifies what may or may not be disclosed and spells out the penalties for any business or person that breaches the agreement. Violation of a non-disclosure agreement may lead to lawsuit.

Here are other times when non-disclosure agreements may come into play:

  • New employees often must sign these agreements because they have access to sensitive company information.
  • Potential investors also must sign them when companies seek funding. The move should protect trade secrets and business plans.

This document is a safeguard measure sometimes referred to as a confidentiality agreement.

An effective tool

From the get-go, you want a trusting relationship with your new business partner. You do not want to look over your shoulder to see whether something askance may occur. A non-disclosure agreement represents an effective tool just for this purpose.