Confidentiality Agreement (NDA)
A confidentiality agreement (sometimes referred to as an NDA or nondisclosure agreement) is an important legal instrument for new South Carolina start-up business during its development stages, or for a small business negotiating the launch of a new product or service. In short, a confidentiality agreement is a binding legal contract outlining certain confidential material, knowledge, or information that individuals or business entities wish to share exclusively. As such, the confidentiality agreement protects sensitive, non-public business information.
Generally, confidentiality agreements are used to protect trade secrets. By definition, a trade secret is a formula, process, device, or item of information used by a business that has economic value because its not generally known or easily discovered by observation or examination, and for which reasonable efforts to maintain secrecy have been made.
Confidentiality agreements are commonly signed when two or more individuals or businesses are in negotiations to engage in business together and need to understand the processes or other information used in each others business for the purpose of evaluating the potential for a short-term or long-term business relationship.
A few common provisions outlined in a confidentiality agreement include:
- A definition of what is considered confidential
- How that sensitive must be kept confidential
- The period of nondisclosure
- Restrictions with respect to the transfer of data between the parties and to certain authorized third parties
- The obligations of the recipient regarding the confidential information
- Types of permissible disclosure
- What happens should a breach of contract occur