In a competitive market, businesses need to maintain the advantage by making sure that projects and new ideas are kept secret until they’re ready to be released. However, in the course of business, one may have to outsource some work; you may have to hire an offshore development team. When this happens, it's crucial to sign an NDA to ensure the utmost confidentiality.
Here at Cloud Employee, we work with companies looking to hire professional offshore developers in the Philippines. Our work has seen many NDA's pass through our hands. If you need to write an NDA for your business, and you’re wondering how to write an airtight document, this article will guide you.
What is an NDA?
NDA stands for Non-Disclosure Agreement. It is a legal document that ensures that your trade secrets are kept safe. Whenever you share sensitive information with clients, creditors, investors, or suppliers, you should have them sign an NDA form to promote trust and protect your intellectual property. You may need an NDA to protect things like secret recipes, client lists, manufacturing processes, marketing strategies, etc.
An NDA can take various forms. There are unilateral NDAs and mutual ones; NDAs can also be definite or indefinite. A definite NDA binds the other party for a fixed period. On the other hand, an indefinite NDA binds a person forever. That means, the signer cannot disclose confidential information even after the contract has ended.
How to Write a Non-Disclosure Agreement for Software Development
NDAs come in different forms. Based on the parties involved and the purpose of the agreement, each non-disclosure agreement will be a little different. Although there's no strict template for writing a non-disclosure agreement, there are some components that must be clearly defined in each non-disclosure agreement.
Identify the parties involved
The first section identifies the parties that are involved – the disclosing party and the recipient party. Sometimes, the software developer may have to share confidential information with agents and other partners, as part of the job. In that case, you should make sure that your NDA identifies all of them. However, also try as much as possible to limit the number of people who have access to confidential information.
Identify the owner of the confidential information
For the sake of clarity, an NDA should state the owner(s) of the information being shared. If more than one person owns the intellectual property in question, then all the owners should be included in the NDA. Your NDA should also include the details of anyone who has permission to handle the information in question.
Define what is considered confidential
The next section of an NDA covers what is considered confidential and what isn't. For instance, should the recipient consider all written information as confidential? How about verbal agreements, do they count as confidential information? If you can, it's a good idea also to spell out what isn't confidential. For example, public knowledge isn't protected by a non-disclosure agreement.
Outline the details of the confidential information
This is the most critical part of an NDA. At this point, you should go into details about the specific information that the NDA covers. If your NDA is too broad, it may be difficult to enforce the contract. Also, being particular allows your software developer to know what he’s allowed to do, and what he’s not allowed to do.
Restrictions on the use of confidential information
In this section of an NDA, the disclosing party spells out the perimeters along which the information can be used. Many NDA restrictions require the recipient to:
- Only use the confidential information for the purposes detailed out in the NDA.
- Share the confidential information only with people who have permission to access it.
- Make sure that these people follow the restrictions of the NDA.
- Take the necessary steps to keep the information secret.
Duration of the agreement
A non-disclosure agreement should outline the timeframe during which it is valid and enforceable. Typically, the duration of an NDA for software development is two to three years. But based on your needs, it can be shorter or longer. Most NDAs also require the recipient to destroy the confidential information once the agreement expires.
Consequences of breaching the agreement
Finally, you should include the consequences of breaching the NDA. Usually, business owners will ask for monetary compensation when a software development NDA is breached. Some may even include the costs of hiring a lawyer and attending court sessions.
When it comes to consequences, it’s up to you to determine what is an appropriate remedy. You should consider the type of information in the agreement, and the level of harm that will follow if that information is disclosed.
Non-Disclosure Agreement for Software Development: Sample Template
As mentioned earlier, there's no fixed format for writing an NDA. But the standard guide can be found on our non-disclosure agreement template.
To Conclude
In software development, a non-disclosure agreement is crucial for keeping your trade secrets safe and maintaining a competitive edge. This article highlights the vital components to include in your NDA. I hope it has been helpful.
We hope you found this article useful. Please remember to share this article or leave a comment below.
Here at Cloud Employee, we assist companies looking to hire dedicated offshore developers across many technologies. Talk to us, learn more how Cloud Employee works, or see our Developer Pricing Guide.
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