Everything to Know Before Signing or Creating an NDA

Summary

This video explores non-disclosure agreements (NDAs), explaining their importance in protecting sensitive information in industries like tech. It distinguishes between unilateral and mutual NDAs, discusses terms like covered information, effective dates, and consequences for violation, and compares NDAs with non-compete agreements, highlighting their enforceability and potential issues.

Takeaways

• 📜 Non-disclosure agreements (NDAs) are contracts that restrict one or both parties from disclosing certain information.
• 🔒 NDAs are prevalent in industries like Tech, where employees may be exposed to sensitive information.
• 🤝 There are two main types of NDAs: unilateral, binding only one party, and mutual, binding both parties.
• 🌐 The internet has heightened the importance of NDAs, as information can quickly spread and be exploited once public.
• 💼 NDAs are often included in employment contracts and may be part of the contract or an attachment.
• 🔍 Covered information in NDAs usually includes trade secrets and all confidential information learned through employment.
• ⏳ Effective dates of NDAs establish when the agreement is active, often starting immediately and lasting post-employment.
• 💰 Consequences for violating an NDA often include liquidated damages, a predetermined amount owed in the event of a breach.
• 🔄 Liquidated damages are particularly useful for protecting information related to new technology, where harm can be difficult to quantify.
• 🚫 Non-compete agreements are different from NDAs, as they restrict an individual from competing with a former employer or business.
• 📚 The enforceability of NDAs and non-compete agreements depends on jurisdiction and the specific terms of the agreement.
• 📝 Understanding NDAs is crucial for both employers seeking to protect information and employees considering new job opportunities.

Q & A

What is a non-disclosure agreement (NDA)?

An NDA is a contract where one or both parties promise not to disclose certain information. It's used to protect sensitive information in various industries.

What are the two main types of NDAs mentioned in the script?

The two main types of NDAs are unilateral NDAs, which bind only one party, and mutual NDAs, which bind both parties involved in the agreement.

Why are NDAs particularly important in the Tech industry?

NDAs are crucial in the Tech industry because employees often need to be exposed to sensitive information to perform their jobs, and once this information is disclosed, it's hard to control its spread or misuse.

What is the role of the internet in making NDAs more important?

The internet has made NDAs more important because once information is released online, it's very difficult to remove or prevent others from exploiting it.

What is a less common but notorious type of NDA?

A less common but notorious type of NDA is created as part of a legal settlement, where one party agrees not to disclose harmful information about the other in exchange for payment.

What does 'covered information' in an NDA typically include?

Covered information in an NDA usually includes trade secrets and all other confidential information learned as a result of employment.

What are 'effective dates' in the context of an NDA?

Effective dates establish when the NDA becomes active. They often start immediately and last for a certain period after the employment ends.

What is a 'liquidated damages provision' in an NDA?

A liquidated damages provision is a contract clause that sets a predetermined amount of money owed if a party breaches their obligation under the NDA.

How are NDAs different from non-compete agreements?

Non-compete agreements are provisions that prevent an employee or business owner from competing with a business, usually their former employer. They are different from NDAs, which focus on preventing the disclosure of sensitive information.

Why might a court be more likely to enforce an NDA over a non-compete agreement?

A court may be more likely to enforce an NDA because it covers the disclosure of information and can be less restrictive on an employee's future job prospects compared to non-compete agreements, which limit conduct and competition.

What additional information does the video offer about NDAs?

The video offers a second part that breaks down things that can invalidate an NDA and encourages viewers to subscribe for more videos on relevant business law topics.