INTRODUCTION AND MEANING:

 Non-disclosure agreements (NDAS) are common in business nowadays. They provide safeguard to keep the trade secrets and other confidential information of the business under wraps. NDAs mostly include the protection of research and development activities, innovations related to a new product, client information, sales plan, marketing strategies, or a unique process of manufacturing.

For example, an agreement between a company and a due diligence agency, a bank and its client, employer, and employee holding some unique method as to product’s production, etc.

NDAs are governed by the provisions of the Indian Contract Act, 1872 and are required to be mandatorily stamped so as to be a valid legally enforceable document.

NDAs generally ensure that the business secrets are protected and will be kept underground and in case of any failure the company has the option of legal recourse and claim compensation and damages.

NDAs are a kind of contract enforceable by the law creating a confidential and legal relationship between the person who holds some sort of trade secret related to business and a person to whom that secret will be disclosed or divulged. So basically, the contract ensures that the person who is receiving the information needs to keep the same secret and confidential and to use the same only for the purpose mentioned by the company. Thereby, if he breaches any term of the contract he will be liable to the company. Even when he allows others to access confidential information through illegal or unconventional methods or encourages others to breach it, will be considered a breach of contract.

KEY FUNCTIONS:

(a) Protecting the sensitive information: Under NDAs one party to the contract promises to another party not to divulge or spill the secret information shared with him or her. If the information is somehow spilt then another party can claim breach of contract and claim the damages.

(b) Protecting the patent rights: In case of a new product or concept development NDAs help to keep the patent rights with the inventor and thereby, public disclosure of a new invention can lead to void patent rights.

(c) Confidentiality: NDAs express what information is private and what information is fair game. They serve as a document that classifies exclusive and confidential information.

CONTENT OF NDAs:

(a) Definitions of confidential information: This spells out the types of information that are covered by the agreement. This establishes the rules of the contract without actually releasing the actual information.

(b) Obligations from all parties involved: Such an agreement excludes certain information that is outside the purview of the protection i.e. the information which is not confidential. It comprises information that is already common knowledge that is or may be known to people.

(c) Time periods: The contract contains time period restrictions which means that the party receiving the confidential information should stay silent for the time (years) mentioned in the contract. This specific information is usually open for negotiations.

TYPES OF NDAs:

(A) BASIC NON-DISCLOSURE AGREEMENT: This kind of agreement is generally used to protect the confidential information of the business like for example, partnership, sales, we-design, web development, film production, etc.

(B) MUTUAL NON-DISCLOSURE AGREEMENT: This kind of agreement protects the private information which is exchanged by both parties to the contract. It is also known as a two-way non-disclosure agreement.

(C) EMPLOYEE NON-DISCLOSURE AGREEMENT: This kind of agreement is entered into generally with the employees, partners, consultants who agree to keep the information related to the business secret and protected.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.