A Non-Disclosure Agreement, which is also typically called a Confidentiality Agreement, is essential for many small businesses during the planning and startup phase for a new Colorado LLC. A Non-Disclosure Agreement is a legal contract between two or more parties that establishes a confidential relationship between the parties in regards to information that is shared between the parties but that should not be made available to third parties or the general public. This type of agreement is often used when an entrepreneur is sharing their new business idea with an advisor, a potential partner, or a potential investor. An NDA can also be used when two businesses are working together on a particular project, but they want to protect their confidential information from leaking to their competitors. In either case, the business owner is simply being diligent to protect their secret information (i.e., business name, business idea, customer lists, business plan, trademarks, patents, trade secrets) so that they do not lose their competitive advantage in the marketplace. A good NDA clearly defines the proprietary information, restricts the recipients use of the information, and defines the legal remedies available if they recipient breaks the agreement. When a party to the contract shares the confidential information, a breach of contract occurs which can lead to legal liability for the offending party and an award of money damages to the non-offending party. Especially in our current economy, businesses are seeking any advantage they can to stay afloat and beat the competition. Unfortunately this often means that entrepreneurs that come up with a good idea are vulnerable to having that idea stolen or exploited. Before sharing your business idea with others, make sure that you seek legal advice on this topic and insist that the other party sign a Non-Disclosure Agreement that protects your Colorado LLC.
E-mail info@RockyMountainStartup.com for more info on NDA’s.