8 Mistakes That Startups Must Avoid While Entering into NDA

1. Consagous Technologies LLC

2. The element that makes a startup innovative is its unique idea or new approach to solve existing issues. • An idea signifies its very existence so, by all means, that idea should be safeguarded. • NDA is to protect the confidentiality of information shared with an outsider. • Though a proper attorney should be hired to avoid all the pitfalls still one must have knowledge of what could go wrong that render NDAs unenforceable.

3. Some of The Common Mistakes That Make NDA Un-enforceable are as Follows:- Not Specifying What Information Will be Covered and For How Long. Not Specifying When or How Disputes Related to The NDA Will be Resolved. Exceptions not Included. Not Naming The Disclosed Information as Confidential. Not Retaining an Electronic Copy of a Signed NDA. Leaving Clerical Loopholes. Agreements Signed by an Unauthorized Person. Not Defining The Scope of What You are Disclosing to The Party Who Signed The NDA.

4. Not Specifying What Information Will be Covered and For How Long • What type of information is being disclosed; • Whether the NDA covers only written disclosures or both written and oral disclosures; • By what means the information will be disclosed; • How the disclosed information may be used by the recipient; and • How long will the recipient be bound by this NDA.

5. Not Specifying When or How Disputes Related to The NDA Will be Resolved • It’s not sufficient to just ask for confidentiality through a piece of paper. • A procedure should be outlined for enforcing the agreement. • An NDA must have a clause to specify where and how any disputes related to the NDA will be resolved and by what means like mediation, arbitration or litigation.

6. Exceptions not Included • NDA with clauses that are difficult to adhere to is stricken down by courts so, including exceptions in the NDA will increase the chances that it will actually hold up in court. • Exceptions usually include information which is already public, information which was received by a third party and information that the signer have developed on a personal account.

7. Not Naming The Disclosed Information as “Confidential” • Any information disclosed under the NDA should be marked as “Confidential”. • Corporates falsely believe that they are covered under one blanket NDA but that is not the case. • All shared information must be designated as confidential to avoid future disputes as to whether certain information was meant to be confidential or not.

8. Not Retaining an Electronic Copy of a Signed NDA It is very common to occur that a hard copy of a signed NDA is somehow lost and no one can find an electronic copy with all the signatures.

9. Leaving Clerical Loopholes • Clerical errors can render contract of any sort invalid, so it’s crucial to get all of the information correct. • If you are working with a company, you want to ensure that you use the proper company name in the agreement with ‘Ltd.’ • Included at the end, failing to include “Ltd.” at the end of the company name or using DBA(Doing Business As) name may render the NDA invalid.

10. Agreements Signed by an Unauthorized Person • If an NDA is signed by a person who is not entitled to execute a binding agreement, it could potentially invalidate the agreement. • For instance, a representative of a company may have the power to interact and deal with the client but he may not be entitled to sign any sort of contract.

11. Not Defining The Scope of What You are Disclosing to The Party Who Signed The NDA A party should always define the scope of what is being disclosed and essentially check whether the information disclosed is absolutely necessary for the other party to know related to the scope of the NDA.

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