What is a Non-Disclosure Agreement and why do You need one?

Written by Meshack Masibo

3 years ago, one of my first Clients approached me, he runs a software development company that has developed a steady client base. However, he felt that he did not have all the skills needed to guarantee the continued success of his business and wanted to onboard a business development partner. He was worried that the partner might take over his business or share his trade secrets with a competitor because he served different clients. He wanted a way around this, how could he get the talent but not lose control or lose business to his competitors?

This is a question that many people starting and running businesses especially in the technology field have. The technical expertise in building a marketplace does not always equate to the ability to develop the business or secure investors. In such a situation, a trade-off is necessary, you give something away to gain something else. You admit what you don’t know and seek the talent of someone who does, but how do you protect your interests in such a situation?

One of the ways to do this is through a Non-Disclosure Agreement (NDA). An NDA is a legally enforceable agreement between parties that is used to control how one party shares private/confidential information belonging to the other. In the situation discussed above, one of the documents I developed for the Client was an NDA which made it illegal for the business development partner to share any personal information belonging to the Client with his other clients.

The benefits that come with Non-Disclosure Agreements are numerous and include the following;

  1. It gives you the confidence to share personal information

Having an NDA in place makes you confident that you can share private information with your partners and employees without worrying that they will share the information with your competitors.

2. It creates consequences for leaking your Company’s secrets

An NDA is a legally enforceable document which means that if someone breaches it, you can sue them in court for breach of contract. This means that if your employee or partner leaks your company’s secrets, you can sue them in court and they can be penalised for that.

3. It helps you nurture great relationships

Trust is the backbone of any business and if you have an agreement defining what is and is not private information, it makes it clear to both parties what is and is not acceptable to reveal and sets the stage for a great business relationship.

Next week, we’ll talk about the other solution I gave the client to retain control of his business. Have you ever gotten into a Non- Disclosure Agreement?

The writer is a lawyer who specializes in offering legal services to people in technology. You can contact him through info@masibolaw.co.ke

Published by masibolaw

We help ambitious entrepreneurs to overcome legal and regulatory obstacles while growing their businesses.

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