3 Reasons You Need a Nondisclosure Agreement
If you are sharing private information about your business that you would not want to become public knowledge, the recipient of that information needs to sign a nondisclosure agreement. A good nondisclosure agreement will keep the recipient of that information from (1) sharing that information with third-parties (even within their own organization) and (2) using the information you provide them for their own personal gain. Here are the top three people who should be signing nondisclosure agreements prior to you sharing the protected information with them:
1. Employees and Independent Contractors
To effectively do their jobs, some of your employees and independent contractors may need to know details about your business that you wouldn't want your number one competitor to know. You must keep in mind that your employees and independent contractors may not always work for you. In order for you to ensure that your private business information remains confidential, even after your employees and independent contractors leave your business, you must have them sign a nondisclosure agreement.
2. Potential Investors
Many businesses seek investors to help with the initial startup phase of their business or when they are trying to scale their business to the next level. To assess the risk of a potential investment, investors rightfully want to know absolutely everything about your business. Of course, sharing everything about your business places you in a very vulnerable position given that there is no guarantee that the investor will ultimately decide to make the investment. To prevent the potential investor from misusing the information, it is in your best interest to have them sign a nondisclosure agreement.
3. Prospective Business Partners
Like investors, prospective business partners will want access to all of your company's records and other private information, in order to make an educated decision on whether or not to become your business partner. There is no guarantee that your prospective partners will become your actual partners. To avoid all of your company's key information being disclosed to third parties, do yourself and your company a favor and make sure you have a nondisclosure agreement.
About the Author
Amanda N. Jelks is licensed to practice law in Tennessee and Georgia. Her firm, Jelks Law PLLC, focuses primarily on legal issues that affect businesses and estates. Jelks Law was selected as the 2018 Emerging Business of the Year by the Urban League of Chattanooga. Amanda has been chosen as a Rising Star by Super Lawyers® for the last three years in a row. This award is given to less than 2.5% of attorneys in the mid-south who are under the age of 40 or have been practicing less than 10 years. Schedule a time to speak with Amanda today.