Dealing with Non Disclosure Agreements

Lately I’ve been talking to a lot of start-ups, all of which have in their back pocket some kind of NDA that they either want me to sign personally, or want me to sign on behalf of Readify. Of course it isn’t just start-ups that have NDAs, our customers have NDAs as well, and our partners (such as Microsoft).

The purpose of an NDA is to allow two organisations to freely discuss business plans and the information that informs those plans (whether they are technical in nature or not) whilst creating legal ramifications for one or both organisations abuse access to that information.

Personally, I think every time someone asks you to sign an NDA, you should say “What, don’t you trust me? That’s the great way to start a business relationship.” – to which lawyer types would likely say its all about protecting your own interests should the worst happen.

If you are the recipient of an NDA there are some very good reasons for you to not sign the document before you have an initial discussion:

  1. There may be a conflict of interest and signing the NDA prematurely might compromise your ability to execute on your own interests.
  2. Exposing yourself to silly litigation situations for even minor infractions, especially true of you get into a situation where one side isn’t happy with the other side.

In the past I’ve signed NDAs and not thought too much about it. But I’m going to start to ponder them a bit more these days especially since people are coming to me wanting something from me, rather than the other way around.

Here is a great article on ReadWriteWeb on the topic of why a VC won’t sign your NDA.

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