4 Key Considerations To Make When Signing an NDA

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At some point in your life, you’re almost certain to be asked to sign an NDA (a non-disclosure agreement).

An NDA is a tool designed to protect companies’ sensitive or proprietary information … whilst also allowing employees to share information within the company freely.

The NDA will carry prohibitions on sharing certain information or assets outside the company: for instance, signing the NDA might mean that you’re promising you won’t share the company’s client list or trade secrets with anyone else.

This is important because it protects companies if you move to a new role with a competitor or if you set up your own business.

NDAs aren’t just used by businesses, though. They can be used by high-profile individuals, to protect them from unwelcome revelations in the media. (Under Donald Trump, for instance, NDAs have been increasingly used in the White House.)

Academic institutions like universities can also use NDAs, and this has been a cause of recent criticism in the UK as some NDAs have been allegedly used to keep misconduct victims silent.

If you’re asked to sign an NDA (or even if you want to create an NDA online for your own business) you should keep these four key considerations in mind:

#1: Does the NDA Clearly Define Proprietary and/or Confidential Information?

Some NDAs are written in quite vague terms that don’t pin down exactly what they do and don’t cover.

The last thing you want is to inadvertently breach an NDA by chatting about something that you didn’t realize was confidential at all … so do make sure that if anything in the NDA is unclear in scope, you get it clarified.

This could potentially mean asking for the NDA to be rewritten. Don’t be afraid to do so: you may well find that the company is more willing than you’d think to reword or even strike out part of the NDA.

It’s important for both you andthe company that you’re clear about exactly what the NDA covers, so it’s in their interests to get this right, too.

If you’re a contractor or freelancer who’s been asked to sign an NDA, it’s particularly important that you’re clear exactly what it covers. You don’t want to be sued by (as Hartley Brody puts it) an “overly litigious client” because another of your clients happened to come to you with a broadly similar idea.

#2: Will the NDA Still Apply Long After This Job is Over?

Most NDAs will apply for a certain period of time after you leave or finish a job … and some will apply for a very long time.

You definitely don’t want to end up in trouble for revealing something you learned a decade ago in a job you held for six months as a new graduate, so do make sure that you (a) know how long the NDA will remain in force and (b) feel that this is reasonable.

Again, don’t be afraid to ask for changes, especially if the NDA might impact on your future career (for instance, it might prevent you working for a competitor within a certain period of time – which could seriously hamper your options in a crowded job market). The time period covered by the NDA may well be up for negotiation.

#3: What Will Happen if You Do Breach the NDA?

It’s easy to sign an NDA thinking that there’s no chance you’d ever breach it … but all it takes is a slip-up for that to happen.Even something as simple and accidental as leaving your work laptop in a bar could be seen as a breach of an NDA, as it could allow proprietary information to be accessed.

Ideally, the NDA should spell out what happens if you break the agreement. You want to be sure that you feel those consequences would be reasonable. Don’t assume that they won’t apply in the case of an accidental breach: your employer might consider you to have been careless or negligent.

The consequences for breaching an NDA could involve a fine, losing your job, or even having to pay damages to the company (which could be quite high). If you’re in a position where you are considering knowingly violating an NDA that you’ve signed, it’s definitely a good idea to talk to a lawyer to get their advice on how to proceed.

#4: What Will You Get Out of the Deal?

If you’re asked to sign an NDA, you’re supposed to get something out of it. In many cases, what you’ll be getting is a job – and it’s not unusual for fresh hires to be asked to sign NDAs as a matter of course (even if these aren’t really necessary).

If you’re asked to sign an NDA at some point during your employment, though, it’s normally considered appropriate that you’ll receive some form of “new and fresh consideration” as a result. This means something like a raise, a bonus, increased benefits (e.g. more vacation days), or similar.

Remember, there’s nothing stopping you from negotiating! If you’re being offered a paltry raise or an insignificant bonus in exchange for signing a document that will severely restrict your short-term career options, then you may well want to ask for something more significant instead.

Don’t sign an NDA if you’re not getting anything out of it. No one can force you to sign an NDA (though it could well be a condition of something you want, e.g. employment). If you’re being pressured to sign an NDA, you might want to consult a lawyer.

While NDAs are an important and necessary tool for many businesses and institutions, they can also be misused.If you’re asked to sign an NDA, don’t just do so blindly: make sure you carefully read the document and seek legal advice if appropriate. Be willing to negotiate, too; the terms of the NDA are not set in stone, and your employer or institution may well be flexible here.

Finally, remember that an NDA is a contract, and that breaking it can have serious consequences – you might not only lose your job but also face a hefty fine, or have to pay damages. If you’re in a position where you’re considering deliberately breaching an NDA, it’s very wise to seek legal advice first.