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Should your company use a non-disclosure agreement?

| May 4, 2021 | Blog |

If you own a Minnesota business and have employees, use the services of vendors and contractors, or engage independent contractors, you may wonder whether you should utilize nondisclosure agreements.

Definition of a nondisclosure agreement

Minnesota business and commercial law defines a nondisclosure agreement, commonly known as an NDA, as an agreement entered into between a business and employee, or some other individual engaged by the enterprise. An NDA prohibits an employee from disclosing confidential or proprietary information gleaned during the course of employment or engagement, if signed by some other type of professional or worker.

Benefits of an NDA

The primary and obvious benefit of an NDA is that it is designed to protect confidential or proprietary information and intellectual property from misappropriation and use by a former employee or other individual providing goods or services to your company that might be privy to such data. While an NDA is not foolproof, and former employees fairly frequently violate them, without such an agreement, a business has less of an ability to protect against the appropriation of proprietary information and other data.

Sanctions in an NDA

As part of a nondisclosure agreement, a business can set out agreed sanctions imposed should a former employee breach the contract. Laying out agreed sanctions in the agreement itself can make it easier to obtain compensation for a breach of the contract and may even prevent such a contravention in the first instance.

Enforcing the terms of an NDA in the event of a violation by a former employee can be a challenging legal endeavor. If your business uses NDAs and experiences a situation in which a former employee appears to have breached the agreement, seeking professional assistance from a seasoned Minnesota business and commercial law attorney is a wise course. In addition, engaging legal counsel to draft such a contract in the first instance is also recommended.