No matter where you are in your online business building journey, working with others is necessary. Have you considered getting a Nondisclosure Agreement (or NDA) in place?
Whether you have been thinking about:
- collaborating with another business,
- forming a joint venture (like an online summit or webinar, for example),
- hiring a freelancer (aka an independent contractor),
- working with potential investors, or
- something as simple as an Instagram stories takeover or swap,
But, before we chat about what an NDA is and why you should have one, remember that everything I chat about is legal information and education. It is not legal advice and does not create an attorney-client relationship between us. I am a United States Attorney, so everything is from the perspective of United States law. You should consult with an attorney in your local area to make sure you’re taking the right steps for you and your business.
(For a general overview of the legal issues you should be considering in your online business, snag a copy of An Online Entrepreneur’s Guide to Starting a Business).
What is an NDA?
An NDA (sometimes also called a confidentiality agreement) is a legal contract between parties that outlines what private business information cannot be shared with other people and businesses.
Basically, it creates a legal obligation to keep a secret!
Why do I need an NDA?
You can’t copyright an idea BUT you can sure as heck do your best to protect one (and you can read more about Copyright Issues Every Business Owner Needs to Know for more info about copyright).
You might be sharing your private (proprietary) business information while chatting with someone about (or in the process of) a collaboration, joint venture, potential hiring, etc. – passwords, email addresses, leads, how you price things, proprietary materials you create, original ideas or processes – all things you don’t want to be shared with your competitors or the general public!
The long and short of it? An NDA helps prevent idea theft and can help diminish the chance of a data breach. And with the ever broadening privacy protection laws, having an NDA in place is a protective (and standard) business practice.
What if someone acts in violation of the agreement?
The purpose of an NDA is to provide you with legal recourse if someone breaches your agreement.
Provisions within an NDA provide that the breaching party will owe you damages and can be ordered to stop their actions in violation of the agreement.
While enforcement can mean that you will have to file a lawsuit and proceed through the proper legal channels, an NDA provides an extra layer of protection by putting people on notice that you intend to protect your private business info. And smart business owners will honor and respect that agreement.
BUT you also want to make sure you do your due diligence to explore whether the person you intend to enter into an NDA with is trustworthy.
Is there info I can’t keep secret?
Not everything can be considered confidential under an NDA.
Examples of things that are not considered confidential, even with an NDA in place include:
- Information someone had before executing an NDA
- Information generally known to the public
- Information rightfully obtained from another party
- Information developed without use or reference to the private information
Is there anything else I should consider?
Be careful not to disclose anything before the NDA is executed. Without the agreement, anything disclosed is not confidential.
Make sure the person signing the NDA has the authority to do so if they are executing on behalf of a company. This may take some investigating, but you want your NDA to be enforceable. Which isn’t possible if someone not authorized to sign executes the agreement.
Be sure to identify what is confidential at the time that you provide it. Since your NDA will include a definition of what is considered confidential information, you want to be very clear about what business info falls within the scope.
Remember it’s always better to be safe than sorry! You may not think you need an NDA but your business is yours – you’ve worked hard to develop a unique niche and you don’t want to be thinking “coulda, shoulda, woulda” if someone uses your private business info in a way you don’t appreciate.
And if you know you need to get an NDA in place, you can snag an easy to use attorney-drafted NDA Template in my legal shop.