An NDA, also known as a non-disclosure agreement, is a legal document that safeguards sensitive and private information that one party gives to another. By agreeing to an NDA, the party receiving confidential information pledges to use it only as authorized and to keep it secret from outside parties.

This agreement guards against reputational harm and unfair competition for the party providing the sensitive information (also known as the disclosing party). The opposite party may file a lawsuit if one side violates the agreement.

Non-Disclosure Agreements: Types

One-way or unilateral agreements – In these types of agreements, only one side has access to the private information that needs to be communicated. The “disclosing party” is the one who is in possession, while the “receiving party” is the one who is getting the information.

Bilateral or two-way agreement: In this situation, there are two parties involved and there is secret information that needs to be communicated.

A multilateral agreement involves three or more participants. One of them shares private or confidential information, and the others pledge to keep it private moving forward.

When to sign a Non-disclosure agreement?

An NDA must be entered into and signed in a number of instances or scenarios. Here are a few of them into an agreement,

  • When seeking advice from experts on a new product
  • when beginning a new project
  • when exploring the possibility of an investment with another party
  •  when offering employment
  •  when hiring a contract worker for a delicate project
  • when dealing with delicate client information
  • when discussing commercially sensitive information with another party, etc

So as to keep it secured in accordance with the terms of the nondisclosure agreement that is inserted to protect the propriety, etc.

Benefits of Non-disclosure agreement

The following are some key advantages of signing an NDA. –

  • The “confidential matter” for which the nondisclosure agreement is engaged is expressly described in a secret Clause of the agreement.
  • By legally tying the parties together through the many terms created under the Non Disclosure agreement, it aids in maintaining the utmost confidentiality between the parties. The receiving party is not allowed to reveal the secret information as a result.
  • The Non Disclosure Agreement specifies the duration of the obligation to maintain confidentiality in various clauses. This time frame might extend past the NDA’s own effective time frame.
  • A non-disclosure agreement is enforceable in court, and anyone who violates it is responsible for paying damages to the person who was wronged (usually the party who disclosed the information).
  • If the amount of violation warrants, the disagreement may be submitted to the Arbitrator or even brought before a court. In this way, the owners of the shared private information are given relief for their efforts to protect it through the Non Disclosure Agreement.

Precautions to be taken 

  • One must make sure that all information that is confidential in nature and shared with the other party or will be shared with them is expressly and unmistakably stated in the nondisclosure agreement.
  • Make sure that everyone signing the agreement understands what they are agreeing to. The parties must have a mutual understanding of their rights and obligations under the nondisclosure agreement.
  • It is not ideal to put unfair conditions in the NDA, but thorough consideration of the other party’s nature must be made beforehand, also known as performing due diligence, and clauses must be included to the Agreement as necessary.
  • Behavior during the NDA can serve as a good early predictor of how the negotiations will go overall. While it is not a good idea to include unjust conditions in the NDA, being overly stringent also fosters a challenging workplace.
  • No clause in the same nondisclosure agreement may be unclear or in conflict with another clause because this could lead to misunderstandings between the parties. Since the parties’ confusion may also result in legal fees.
  • If the parties to the agreement mutually agree to submit a disagreement or agreement breach to an arbitrator rather than to court, it would save both parties time and money.

Is printing a non-disclosure agreement on stamp paper necessary?

Getting an NDA printed on stamp paper is not required. An NDA may be printed on business letterhead and bear the signatures of all parties on both sides of each page.

If you decide to stamp the NDA, use a non-judicial stamp paper or an electronic stamp (available in some states). In the presence of witnesses, have the NDA signed. After that, you must have the NDA notarized.

Is Non-disclosure agreement registration necessary?

Registration of an NDA is not required, according to the Indian Contract Act, which governs non-disclosure agreements in India. However, registering an NDA is encouraged because it makes it simple to demonstrate both the legitimacy of the document and your argument.

What happens If a Non Disclosure Agreement Is Breached?

A Non Disclosure Agreement (NDA) violation may result in monetary fines or injunctive relief, among other legal repercussions. Depending on the terms of the specific NDA and the nature of the infringement, different consequences may apply.

NDAs often include clauses that provide for both monetary compensation and injunctive recourse in the case of a violation. In addition to any gains made by the party who violated the agreement as a result of the breach, damages may also include actual losses incurred by the party providing the information as a result of the violation. Court orders to stop the violating party from using or disclosing the confidential information in the future or to return any such information already in their possession are examples of injunctive relief.

Non-disclosure agreements can be challenging. Since there is a lot on the line when it comes to trade secrets, they are made to safeguard a company’s private information. The NDA’s phrasing must be exact in order for any violations to be upheld by a court. This is why it’s important to treat these agreements carefully. Don’t worry contact us for a hassle-free Non disclosure agreement registration https://www.phoenixtax.in/