The basic purpose of any non-disclosure confidentiality agreement is to protect the secrets of the company before the individual or the firm with which you are planning to do business actually signs the contract with terms and conditions.
There are many terminologies used for the confidentiality agreements like NDA or nondisclosure agreement. No matter what terminology has used the purpose of all the agreements is usually same. This agreement or NDA is very important for the organizations all over the world. In this fast paced world where employee turnover ratio is increasing with every passing day and people are changing vendors over the period of time, it is important to protect your trade secrets.
The basic purpose of any non-disclosure confidentiality agreement is to protect the secrets of the company before the individual or the firm with which you are planning to do business actually signs the contract with terms and conditions. This way even if the deal does not close, still the other party cannot misuse or use the trade secrets for own purposes. There are multiple scenarios in everyday life where you might be needing confidentiality agreement template like hiring an employee for a service based company, discussing the plan, prototype or unique idea with the concerned part or planning to own the franchise. When the other party signs the NDA then it is liable to protect your secrets whether they get the deal or not. In any case, if the information is disclosed, the party at stake can always sue the other party for disclosing important information.
Usually, the agreement is prepared by the human resource department or the corporate lawyer of the company. The NDA can be used in multiple scenarios and both for protection of personal as well as business information. The agreement usually does not discuss the nature of the information that needs to be protected rather it discusses the ways how the sensitive information should be protected by the other party involved in the transaction in case they get the deal or the drop the deal.
Asking the other party in a transaction to sign the nondisclosure confidentiality agreements makes the firm free to discuss all the ideas without any hesitation and fear about getting it leaked to direct competition or other stakeholders. The information can be as specialized as some chemical formula or as simple as concealing someone’s identity. It is totally up to the will of organization designing the NDA that they want the other party to keep the information to itself only or in certain situations, they are allowed to pass it on to the consultants or employees affected.
Some of the most common scenarios in which the nondisclosure confidentiality agreements are made include: when the firm is planning to introduce a new product in the market and they show the product to any advertising agency, obviously they do not want the agency to tell anything about their product to direct competition before its launching campaign. Other scenarios can be when someone is purchasing the franchises right from a renowned brand; they are liable to keep the secrets of the brand they are dealing with. Disclosure of important trade able information with vendors, suppliers, consultants, lawyers, employees or the outsourcing agencies all can be asked to sign an NDA.