How to sign an NDA? Tips for startups on who, when, why and how can sign an NDA

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When working with a custom software development company, such as Syndicode, you share vital business details, ideas, and processes. An NDA ensures that the partner company keeps this confidential information secure, enabling open and transparent communication for high-quality results.

In short, to sign an NDA without regrets, pay attention to these key points:

  • Scope and definition of confidential information;
  • Duration of the agreement;
  • Exclusions;
  • Obligations of the parties;
  • Permitted disclosures;
  • Consequences of a breach;
  • Rights to intellectual property;
  • Indemnification;
  • Reciprocity;
  • Dispute resolution;
  • Confidentiality obligations after termination;
  • Limitations on use.

This article will also explore the tools you can use to safely sign a DNA online and suggest additional materials.

What is NDA?

In short, an NDA (non-disclosure agreement) is a legal contract between two parties to keep confidential information secret and not misuse the information without consent.

Put simply, usually, an NDA is a couple of pages that are focused on protecting important information, such as code, algorithms, strategies, sales lists, and so on. If there’s a violation, there can be monetary damages as well as a court order to prevent further disclosures. You shouldn’t underestimate the importance of a non-disclosure agreement!

Why is NDA important?

Most successful entrepreneurs and largest corporations insist on executing and signing an NDA before discussing a partnership, merger, or joint venture. This action is vital to prevent such issues as the unexpected appearance of products they shared during the negotiations and discussions on the other company’s product line. Signing the agreement will also ensure that the trade secrets of both partners will remain safe.

When do you need an NDA?

  1. Intellectual property protection: If you have proprietary or confidential information related to patents, trademarks, copyrights, novel inventions, designs, trade secrets, or copyrighted works. In the realm of software development, this includes protecting items such as
    • Business models;
    • Plans or prototypes;
    • Information about clients or customers;
    • Designs,
    • Trade secrets.
  2. Engaging contractors or employees: When hiring someone who will have access to your valuable or business-confidential information.
  3. Licensing relationships: For instance, when you want to showcase a prototype or a “secret ingredient” to others while ensuring they won’t expose or steal your idea.

Main features of an NDA

An NDA typically comprises several specific components, regardless of its purpose:

  • Definitions of confidential information. In this section, parties identify the information that is considered confidential and specify what the other party can share. This helps establish mutual understanding and facilitates smooth cooperation by defining clear boundaries within which they can work freely.
  • Obligations from all involved parties. An NDA outlines the conditions under which the contract is considered breached and the legal consequences of such breaches. This ensures that recipients of sensitive information protected by the NDA will safeguard it as if their own business interests are at stake.
  • The time period during which the information must remain confidential.

How to sign an NDA: main things to consider

It’s important to read an NDA document carefully to make sure that you understand all the terms and consequences before you sign it. However, there are several crucial things, overlooking which most often results in substantial financial and reputational damage.

  1. Software development company’s legal identity. Some companies have different names for trading and incorporation. You can find a company’s legal name on the founding documents of incorporation, such as the articles of formation or organization (USA), memorandum of association (UK), and articles of incorporation (Canada). Ensure that the correct legal name of the company is used throughout the document to avoid any potential invalidation of the agreement.
  2. Confirm signatory authority: Make sure that the person signing the NDA has the authority to bind the company in such an agreement and is not signing in a personal capacity.
  3. Account for organizational changes: Include clauses that account for future organizational changes, such as takeovers, mergers, or employee departures, to ensure the NDA remains binding.
  4. Determine if it’s a unilateral or mutual NDA: Understand if the NDA is one-sided or mutual, where both parties must keep confidential information private.
  5. Ensure clear definition of confidential information: Avoid overly broad definitions and ensure the clarity of terms within the NDA.
  6. Pay attention to duration: Some non-disclosure agreements have perpetual durations (for example, ones protecting trade secrets), while others are finite. Be aware of the duration of confidentiality obligations, ensuring a clear timeline for the return of any confidential documents.
  7. Understand how confidential information will be disseminated: Carefully review the methods of communication and dissemination of confidential information. This section will also specify who can be trusted with the confidential information. Note that some NDAs may include a residual clause.
  8. Be cautious about intellectual property rights: Ensure that the NDA does not transfer any intellectual property rights if not intended.
  9. Comply with the country’s laws: Ensure that the terms and provisions of the contract adhere to the laws of the country or state.
  10. Understand the damages clause: Review how damages will be calculated in case of a breach of the NDA.
  11. Consider miscellaneous clauses: Look for additional clauses related to legal fees, jurisdiction, and alternative dispute resolution options.

Ways and tools to sign an NDA

The ultimate, 100% safe, and well-known way to sign all types of documents, including an NDA, is the next path:

  1. Converting the entire document (.doc, .docx, or whatever Word format you had) of your NDA agreement into Adobe PDF format.
  2. Printing out the signature page and signing it.
  3. Scanning the signature page into a separate PDF file.
  4. Replacing the unsigned signature page with the signed one.
  5. Emailing the signed PDF version of the NDA agreement to the other company/person/party for counter-signature.

Apart from this method, you can use some online services to sign your NDA digitally. You can consider some of the most popular of them:

  • DocuSign
    This is one of the most common ways of getting digital signatures. DocuSign works like this: you upload an NDA agreement to their website, then identify the people you want to sign it using tags to indicate spots for signatures; then DocuSign emails the document to the signatories for their electronic signatures and stores the completed agreement for you to access.
  • RightSignature
    This is another electronic signature service that started in 2009. It works similarly to the previous service but has a more user-friendly appearance.
  • HelloSign
    This service is special thanks to HelloSign’s API White Labeling, meaning a signer page is customizable to match any needed color scheme. The rest of the options are pretty similar to competitors’. Also, HelloSign allows you to have up to 20 signatures in a single document (up to 20 parties).
  • Adobe Sign
    Adobe was one of the first software companies to enter the e-signature space. Managing signing workflows is available from any location with any device. Plenty of integrations, third-party tools included, and global compliance provided.
  • DigiSigner
    DigiSigner has been known since 2013, so its user base is smaller than its competitors. However, it has pretty much the same options and a nice-looking interface. It’s free but has more advanced options on a paid basis.
  • Eversign E-Signature
    This service provides secure work with many document templates, branding, and integrations. With Eversign’s free e-signature plan, users will receive five documents per month, three API documents, and one team member.

Checklist: things to check before signing an NDA

Useful materials to read more about NDA

Stay tuned! Syndicode’s dedicated development team is here to help you with your future startup, even if you haven’t yet figured out its main idea. To do it together, explore our discovery session procedure!

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