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Unilateral and bilateral non-disclosure agreements

A non-disclosure agreement, or an NDA, is used to protect company secrets. It essentially says that the employee will have access to these secrets as a necessary part of their job, but they cannot legally let this information get to a third party. Doing so could harm the company, which may then take legal action against the employee to seek compensation.

For instance, a food-production company may have a special recipe for a popular product that, though other companies try to imitate it, no one else makes exactly the same way. That recipe is a valuable trade secret that gives the company an edge in the market. Without it, their value would decrease massively.

There are two types of NDAs: Unilateral and bilateral. The most common are unilateral, which mean that only one party is legally bound by the agreement. That would be used in the above example, binding the employee by law to protect the company secrets.

A bilateral NDA says that both parties are not allowed to disclose any type of trade secrets or other confidential information. These could see more use when two companies are working together as partners and they both have secrets that the other will need access to due to the partnership. One company may want to protect their distribution network or client list, for example, while the other company wants to protect the processes used to make their products.

Do you need to use NDAs to keep your company safe? Make sure you know what type to use and what steps to take to get it in place as soon as possible.

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