More than 3,500 confidentiality or non-disclosure agreements are signed in Australia every day. Okay, we totally made that number up but trust us, it’s a lot.
NDAs are often exchanged when businesses need to share commercially sensitive information to figure out whether they want to work together. Start-ups ask potential investors to sign an NDA to keep secret their business idea that will take over the world. Procurement departments will demand a signed NDA from prospective vendors before issuing EOIs, RFTs and RFPs.
They're used every day by businesses of all sizes, but are NDAs actually good for anything? Here’s what you need to know:
- NDAs protect confidential information. If your NDA doesn’t properly identify the information you want to protect, it’s worthless. Don’t assume your template NDA covers everything. If you’re planning to share customer data, make sure the definition of confidential information in your NDA refers specifically to customer data.
- NDAs explain what the confidential information can be used for. If your NDA doesn’t clearly spell out the circumstances under which the information can be used, it’s worthless.
- NDAs won't save you from a disaster. If your NDA is sufficiently specific, it's enforceable like any other contract. You can ask a court for injunctions to prevent a breach of confidentiality, and you can sue for damages if it's too late.
But let's be realistic here. If information leaks, you may not be able to pinpoint the source. And once you've lost the secret recipe for Coca-Cola, it's gone forever. So, while it's always better to have an NDA than not, your best protection in reality is other people's integrity. And don't give anyone the crown jewels.