Non-disclosure agreement: for confidentiality and protection
In some situations it can be useful to agree a nondisclosure agreement (NDA) or a confidentiality agreement, for instance when somebody wants to exploit a new concept and is looking for a business partner. It is recommended to let potential partners sign an agreement of nondisclosure before giving them access to the ins and outs of the concept. Also, in case of an acquisition or labor contract a non-disclosure clause is commonly included. Dutch contract and business lawyer Hidde Reitsma explains.
Content of a non-disclosure agreement
When two companies or individuals consider doing business together, they need to have access to the relevant business processes or product concept to decide whether or not to start a business relationship. For the entrepreneur whose product or service is at stake, these situations can lead to a field of conflicting interests. He cannot get another business partner on board without at least disclosing some of the details of his product or service, but is on the other hand exposed when negotiations fail to succeed, seeing that the other party has then knowledge of the business concept.
It is therefore recommended to sign a nondisclosure agreement in which the potential business partner is obliged to maintain the strictest confidence, both during the negotiations and after. Likewise, the agreement should include a paragraph about the return or destruction of documents and items made available for the benefit of the negotiations. To ensure that parties comply with the nondisclosure agreement, it is best to agree that contractual penalties will be incurred in case a party breaches confidentiality.
Confidentiality as part of another contract
A nondisclosure agreement is a contract entirely focused on confidentiality. More often a nondisclosure clause is incorporated in different contracts. For instance in case of a labor contract. It could be in an employer’s interest to make sure an employee maintains confidentiality in regard to a company’s trade secrets or its client base. In labor contracts you find that a nondisclosure clause is often combined with a non-competition and/or a non-solicitation clause subject to a penalty stipulation. You can also find nondisclosure clauses in acquisition (share purchase) agreements.
Corporate Law Firm in Amsterdam
AMS Lawyers is a law firm in Amsterdam specialized in corporate law. AMS has a longstanding experience with drafting contracts, including nondisclosure and confidentiality agreements.