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Does your company’s NDA provide the protection that it should?

Dec 30, 2021 | Breach of Contract Claims

Most companies routinely have nondisclosure agreements (NDA) in place. It’s a good idea to have that layer of protection for your company and its assets. One potential problem with a company’s NDA is its failure to safeguard the most valuable and vulnerable corporate assets.

Read on to know whether your NDA provides sufficient protection to your company.

No bell can ever be unrung

Suppose a competitor wants to purchase your very successful website. Despite it not having been up for sale, you are suddenly very interested in hearing the lucrative proposal. 

If the deal progresses, at some point major revelations will be expected. Sight unseen, few buyers will agree to purchase a website with no knowledge of the traffic it generates or its revenue stream from data churning.

But what if the deal falls through?

That can be a major problem. Not all deals get the greenlight, but once revelations are made, it can be impossible to disregard the advantage gleaned from that knowledge. However, there are a couple of options that can further protect the parties involved in the sale.

Make it mutual

Like the idiom says, money talks. When asked to provide sensitive data for review as a condition of purchase, insist on reciprocity for the proposed buyer’s financials. Then, both parties can sign mutual NDAs that protect them from confidential information getting leaked.

Don’t show your full hand

While purchasers will likely insist on full disclosures at some point in the bargaining process, it is fair to insist that any protected data sharing occur later on the purchase timeline. Asking that a signed purchase offer or memorandum of understanding be submitted with the NDA prior to any sharing of protected data is advisable in many circumstances.