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How to create a proper NDA

Businesses in Colorado and throughout the nation may use a non-disclosure agreement, or NDA, as a way to protect confidential information. However, in some cases, it is better to not disclose it at all. It is also important to consider which party or parties will be disclosing such information. If only one party is going to be releasing confidential information, a one-way NDA may be appropriate.

Such an agreement only binds the party receiving information to refrain from disclosing or otherwise using it for their own gain. Ideally, the agreement will be narrowly construed by the receiving party to decrease the risk of violating it. Generally, exceptions will be made if any information received was already public knowledge, was already known to the receiving party or was developed independently by the receiving party. If both parties to a deal with be disclosing information, a two-way NDA can be created.

Regardless of what type of agreement is reached, it is important to understand that it must protect a legitimate business purpose. In some cases, the NDA will only be enforceable for a certain amount of time. It is also possible that the NDA will have terms requiring that any party who receives information will have to return it when the business relationship ends or when the NDA expires.

During business transactions or any other type of cooperative activity between companies, it may make sense to use an NDA. It might be a good idea to have an attorney either draft the agreement or review its terms. This may increase the chances that the arrangement is in a company's best interest or the interest of its owners. Generally speaking, the agreement is legally valid and binding once it is agreed to by all relevant parties.

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