How do non-disclosure agreements protect your company?

On Behalf of | Mar 10, 2022 | Business Law |

Businesses use contracts to help protect the company. These contracts can cover a variety of topics. One important point that most businesses can include in a contract, even if it’s a standalone contract, is a confidentiality agreement.

Most businesses have information that they don’t want to be shared. The individuals who have knowledge of those points or access to the information may be asked to sign a non-disclosure agreement or a confidentiality agreement

What does a non-disclosure agreement do for a business?

While the non-disclosure agreement doesn’t mean that the person who signs it won’t speak about the matters at hand, it does provide a legal basis to take corrective action if the person does reveal the protected information. The agreement should have the penalties for breaching it clearly stated. If something happens and the person doesn’t follow the terms of the agreement, your company can then take action to enforce those penalties. 

The terms of the agreement must also be concise. Courts may not be able to uphold a non-disclosure agreement if it’s too broad. (There are other instances in which it might not be enforceable, such as when the information would have become public anyway even if the person hadn’t have spoken out.)

Businesses must not let their confidential information get into the wrong hands. It isn’t enough to only have the non-disclosure agreements signed. You must also be prepared to call them into effect if someone doesn’t abide by them. Working closely with an individual who’s familiar with contract law can help you to determine the validity of your contracts, as well as how to uphold them if someone breaches them.