A nondisclosure agreement protects your company and your investment in it. But to be a useful tool, your agreement must be legally enforceable. What makes a nondisclosure agreement (NDA) legally binding? Here are six elements that you must generally include.
1. Participants
It should go without saying that this is a contract between you and your employee or contractor. To be binding, contracts must have specific details like the legal identity of both parties Be sure to use correct, legal names and other identifying details.
2. Specify What Is Confidential
To be enforceable, a contract must also be specific about the duties of both parties. In the case of an NDA, this means narrowly defining what is considered confidential. It cannot be so vague as to include everything the employee does or sees. And it must have a clear business purpose, rather than appearing to restrict employees from exercising their rights or being unduly burdensome.
3. Exclusions
There may also be exclusions to the confidentiality rules. For example, one part of your manufacturing process might already be featured in a video posted to the website as a behind-the-scenes marketing tool. Its publication means that it would make no sense to ban an employee from speaking about it.
4. Appropriate Use
NDAs signed at the beginning of a project or employment generally need to define how an employee may appropriately use what they learn about on the job. They will, after all, have to do that job. In general, this section would restrict the use of confidential information to the specific functions of the employee's role.
5. Duration of the Contract
Again, as with any contract, this agreement must have tangible milestones and deadlines. Attempting to ban someone from speaking in perpetuity is more likely to make it unenforceable. If there is no known end date at this point, you may include language about what might trigger the conclusion of necessary secrecy.
6. Legal Language
Finally, your attorney will include certain legal wording about miscellaneous provisions like what happens if the contract is breached, how disputes would be resolved, jurisdiction, and clauses required by your state laws.
Where to Start
By including all the necessary elements of a good contract, your NDA is more likely to survive any challenges to it. Contact an employer attorney in your area to learn more about nondisclosure agreements and you can make them legally binding.
