Protect Your Ideas: What You Need to Know About NDAs

March 26, 2021

NDAs may not be something that is at the top of your to-do list as the CEO of a new company. However, they are helpful for avoiding unnecessary pitfalls as you grow. 

These agreements are critical when building partnerships, exploring new business avenues and scaling a company.

What NDAs Are

Non-disclosure agreements, commonly referred to as NDAs, are a tool for protecting your company’s confidential information.  They are a legally binding agreement between parties to not disclose confidential information about the business to other people. Typically, NDAs are unilateral which means only one party agrees not to reveal confidential information about the business. 

Why They Are Critical

You should use NDAs to prevent someone from coming in and copying your ideas or disclosing your confidential information before the time is right. Additionally, it sets the tone for the business relationships you enter by showing you are serious about confidentiality.

When to Use NDAs

Anytime you disclose information that you don’t want another party to use or disclose to the public, execute an NDA. This rule of thumb applies no matter who you are sharing information with. Some specific examples of times this would be necessary are when you’re hiring contractors, fundraising, working with manufacturers, and negotiating the sale of the company. 

What to Cover in an NDA

It’s important that the NDA makes parties aware of their obligations and the consequences of not meeting them. Key terms should be clearly defined. Your NDA should include:

  1. A specific definition of what is confidential information and what’s not.
  2. The responsibilities regarding confidential information.
  3. A reasonable time period for the confidentiality obligations.
  4. The process for dispute resolution.
  5. The legal recourse if someone breaches the agreement.

To learn more answers to the common questions we get around NDAs, check out Episode 017: NDAs: What Are They and Why do They Matter?


The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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