What Small Business Owners Need to Know About Non-Disclosure Agreements

DuPage County contract attorneysOne of the most important parts of owning a business is forming beneficial relationships with other entrepreneurs and businesses. In an ideal world, these relationships could be casual, but handshake agreements are not always honored. Informal business agreements can quickly go south and result in damage to your business’s bottom line. Business agreements involving another party should be formalized in writing. One such agreement is a non-disclosure agreement, or NDA. Non-disclosure agreements are often essential to protecting a company’s professional interests and continued success.

How Does a Non-Disclosure Agreement Work?

Non-disclosure agreements are a type of confidentiality agreement used to prevent sensitive company information from being shared with other parties. An NDA is a legally binding document which can be used in a variety of situations, most often during proposed or pending business transactions. A company may choose to use an NDA during the sale or purchase of a business, a merger, or during any other conversation in which privileged information is being shared. When discussing a possible merger, for example, the other party will learn information about your business which you may not want shared with anyone else. Allowing news of the merger to reach other businesses or even the press may not be in your best interest. In this example, an NDA can be used to ensure that the other party does not divulge company information to others.

The Two Main Types of Non-Disclosure Agreements

The most common types of non-disclosure agreement are one-way agreements and mutual agreements. A one-way NDA is also called a unilateral NDA. As the name implies, one-way NDAs only bind one of the parties to confidentiality. A unilateral NDA may be useful in preventing potential investors from revealing your business’s information to other people or companies. If you use a one-way NDA in this scenario, you do not have a reciprocating requirement to keep the potential investors’ information confidential. A mutual NDA, on the other hand, applies confidentiality requirements to both parties in a business transaction. A mutual NDA should be used when dissemination of either party’s information could adversely impact the business or the industry. Companies discussing the possibility of a merger most often use a mutual NDA.

Contact a DuPage County, Illinois Business Law Attorney

The Wheaton business lawyers at Stock, Carlson, Oldfield and McGrath LLC, have experience helping clients create formal contracts like non-disclosure agreements and offer many other business law services as well. Schedule a consultation with our law firm by calling 630-665-2500 today.

Sources:

https://www.businessnewsdaily.com/4760-non-disclosure-agreement.html

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

Wording in Business Contracts Matters – What Every Business Owner Should Know

DuPage County business contract lawyersIf you are like most people, you were probably told at a fairly young age that you should carefully read everything you sign, especially contracts. If you are a business owner, it is likely that you now understand why: the wording of a contract matters. More than that, the wording of a contract can change everything. Just a single misunderstood phrase can make or break a litigation claim. Protect your company with effective wording and help from the following information.

Ways Poor Wording Can Jeopardize Your Company

Contracts are used for almost any and every business transaction and agreement – from those forged with suppliers, to those signed by clients or customers, and right on down to the ones your employees sign. So, really, poor verbiage in a contract can jeopardize your company in pretty much every way imaginable. It can lead to litigation for not meeting consumer expectations. It can result in losses with suppliers. It can even lead to wrongful termination lawsuits or other employment litigation matters.

Key Elements to Include in Company Contracts

Because every contract is different, and each will have a different purpose, it is important to speak with an experienced legal consultant before issuing a contract to an employee, partner, supplier, distributor, client, or customer. This can help to ensure that the verbiage is protective to your company, and that you have not missed any key elements for your company's need or industry. Examples of these elements may include (but are not limited to):

  • Concise verbiage to reduce confusion and misunderstanding;
  • Service/product warranties, exclusions, and limitations;
  • Liability limitations and/or exclusions;
  • Information on how disputes may be resolved;
  • Expiry of any expressed guarantees or warranties;
  • Clause releasing you from a breach of contract in the event of unforeseen circumstances; and
  • Information on pricing, penalties, interest, payments, or other service/product details.

Negotiating Contracts with Suppliers and/or Distributors

If you are not the one drafting a contract, but must view it and sign it in agreement with a supplier, distributor, affiliate, or other partner company, it is critical that you have the contract reviewed by your attorney before signing. This can help ensure your company's best interest is protected. If plausible and necessary, your attorney may even be able to negotiate better terms for your business.

Whether you need assistance reviewing a contract or drafting one for clients, consumers, employees, or others, our DuPage County business contract lawyers can help. Dedicated and experienced, we protect your company's interest and seek to ensure your business thrives. Schedule your consultation with Stock, Carlson, Oldfield & McGrath LLC to learn more. Call 630-665-2500 today.

Source:

http://www.forbes.com/sites/allbusiness/2013/10/03/big-legal-mistakes-made-by-start-ups/#463288d8488f