How to Use Non-Disclosure Agreements To Protect Your Illinois Small Business

 Posted on June 21, 2022 in Employment Law

Business owners pour their hearts and souls into their businesses. If you own a business or hope to become a business owner soon, it is crucial that you understand how to protect the results of your hard work.

Non-disclosure agreements (NDAs) are business contracts that prohibit parties from divulging confidential business information. NDAs can be powerful legal tools for protecting trade secrets, client information, and proprietary business practices or methods. However, these contracts must be executed properly to be legally enforceable.

Confidentiality Agreements Have a Range of Uses

Non-disclosure agreements or confidentiality agreements are used for many different purposes. When businesses seek new investors, they share substantial information about their business ideas, inventions, and strategies. What is stopping a potential investor from using this information to start a competing business or selling it to another party? This is why many businesses ask potential investors, partners, or buyers to sign NDAs.

NDAs may also be used to prevent employees from misusing or sharing confidential information. Many employee agreements include NDAs because employees often have access to sensitive information that could damages the business terribly, including:

• Sales information
• Profits
• Financial or accounting documents
• Marketing strategies
• Business plans
• Customer lists and identifying information
• Supplier information
• Product development
• Software code
• Formulas
• Inventions
• Processes

NDAs may be mutual or non-mutual. A mutual nondisclosure agreement prevents both parties from sharing certain information. A non-mutual NDA only restricts one party from divulging information.

Elements of a Strong NDA

Non-disclosure agreements, like all business contracts, must be written correctly to be effective. AN NDA should identify the parties to the contract, explain what information is considered confidential, and provide the scope and terms of the agreement. NDAs may also mention exclusions or exceptions to confidential treatment.

If a party breaches a nondisclosure agreement, the non-breaching party may be entitled to certain legal remedies. The court may order the breaching party to immediately stop the behavior that violates the NDA and require the breaching party to pay damages. The non-breaching party may be entitled to financial compensation for the damage the violation of the NDA caused the company. It should be noted that courts only enforce an NDA and award damages if the NDA meets the conditions required by Illinois law. This is why it is so important to work with a skilled business law attorney when drafting NDAs, employee agreements, and other contracts.

Contact a DuPage County Business Lawyer

The Wheaton business law attorneys at Stock, Carlson & Asso. LLC offer legal advice, support, and representation to business owners. We can assist with drafting and review of business contracts, buying or selling a business, civil litigation, and more. Call 630-665-2500 for a confidential consultation to learn more.

Source:

https://www.forbes.com/sites/allbusiness/2016/03/10/the-key-elements-of-non-disclosure-agreements/