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With growing competition, it is becoming highly important for a business to protect its sensitive information from its competitors or any other party. Further, in high stake transactions, the security and confidentiality of the relevant information also holds special significance. So, it is essential to protect such information, and one of the common ways to do so is through a “Non-disclosure agreement”.

What is a Non-disclosure Agreement

A Non-disclosure agreement (NDA), popularly known as a confidential agreement, is a legal binding document wherein the parties determine the scope of circulation of confidential information. This agreement specifically prohibits the disclosure of confidential information to third Parties. Though the NDA is mainly used to protect the intellectual property rights of a business, it becomes very handy in protecting important business information (client details, transaction amount, etc).

The main objective of the NDA is to protect the interest of the provider of confidential information (disclosing party) and to determine how the confidential treatment shall be treated. So, in a NDA, it becomes critical to identify the relevant sensitive information and determine the purpose in which it could be used.

The Non-disclosure agreement is specifically provided under UAE Civil Code. Article 909 and 910 of the same law states that if the employee has access to any confidential agreement, the employer may ask him/her to sign a confidential or non-disclosure agreement. If the employee breaches the agreement, the employer can seek compensation from the court, after proving the material loss he suffered.

A non-disclosure agreement can be broadly classified in 2 parts: one sided and mutual. In a one-sided NDA, only one party is disclosing the confidential information; whereas, a mutual NDA exists in a situation when both the parties are exchanging confidential information.

Key  Elements of a Non-disclosure Agreement

Since an NDA is considered as a legal binding document, it needs to satisfy the basic conditions of a valid contract including, the offer, acceptance, consideration, etc. It is subject to the UAE general contact Law. A well drafted NDA normally have these components:

  1. The parties to the agreement should be clearly articulated. When an NDA is signed, a confidential relationship is established between the individual and the entity disclosing the information.
  2. It must be clear that what information shall be treated as confidential information for the purpose of this agreement. This helps in identifying the real subject matter.
  3. The agreement should clearly list out the information which is outside the purview of confidentiality; the parties have no obligation to hide that non-confidential information. For instance – a common exclusion from the definition of confidential information is information that was discovered prior to entering the contract.
  4. The agreement should clearly define the obligation of the receiving party. Normally, a receiver is obliged to maintain the secrecy of the information. The damage clause, in case of breach, should also be provided.
  5. The NDA should specifically point out the time for which the information needs to be disclosed. It mainly depends on the nature of business or the type of transaction involved.

In Short

A non-disclosure is an essential instrument in protecting the vital information of a business including its intellectual property rights, client information, etc. For a successful NDA, its drafting gains utmost significance. So, if you want to protect your secret information, contact a legal advisor and draft the NDA as per your needs and requirements.

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