The Purpose and Elements of a Non-disclosure Agreement

Taking the Right Steps to Set Up a Nationwide Business Entity

When you want to create a business with a national market, there are a number of documents you need to put in place. See our page on the 8 documents you want to have in place when you start up nationwide business.

One of the most important of those documents is a non-disclosure (or confidentiality) agreement. Let’s take a look at what that is and how it can benefit you.

The Purpose of a Non-disclosure Agreement

A non-disclosure/confidentiality agreement typically involves a business and a third party with actual or potential access to key proprietary information. The third person may be an employee, a vendor, a customer, an investor or business partner. The key information also may take a variety of forms:

• A specific way of doing business
• A product formula (think Coca-Cola)
• A unique process
• A customer list
• A unique combination of materials

In a non-disclosure agreement, the third party agrees (and becomes contractually bound) not to disclose information about your business to unauthorized individuals or entities. It is the most common way to protect a trade secret.

The Components of a Valid Non-disclosure Agreement

To be enforceable, a non-disclosure/confidentiality agreement generally must include:

• A definition of what constitutes confidential information for purposes of the agreement
• Any items that are not considered confidential information
• The duties or obligations of the person receiving access to confidential information
• The length of time the non-disclosure/confidentiality agreement will be in effect

Note that there’s no requirement that a non-disclosure agreement be in writing. An oral agreement is enforceable, but there can often be proof issues based on differences in the recollection of what was agreed.

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At MCIS Law, PLLC, in Stafford, we aggressively advocate for businesses and individuals in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.