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In the business world, it is not just hard assets that have value: so do ideas and information. In fact, intangible items can often be worth a lot more than tangible ones. Value can be a function of secrecy: something is worth a lot more when others don’t know all the details about it. Consider, for example, a company putting the finishing touches on a new concept for Web-based shopping—their success may well hinge on launching before anyone else copies their idea. The same goes for a new product being produced that competes with something from an established rival. And of course, there is that world-famous fried chicken recipe that everyone wants to duplicate. :)
Companies with valuable secrets often need to work with other companies and individuals, and there is a serious risk of loss if their proprietary information is divulged. To protect themselves, businesses with trade secrets or other private information will often ask for a non-disclosure agreement (NDA) to be signed by the other party. NDAs are also sometimes called confidentiality agreements.
As a freelancer, you will fairly frequently encounter project listings specifying that you’ll be asked to sign an NDA. There’s nothing wrong with in most cases, but you should understand what you’re getting yourself into before you sign on the dotted line.
The risk of disclosure of private information increases when the party you’re dealing with is not well known to you. Thus, it makes sense that many clients would want freelancing contractors to sign NDAs before working with them, given that they may be hiring people whom they have literally only known for an hour or two.
If you encounter a project listing where the client says you’ll be required to sign an NDA if you get the job, I wouldn’t let this necessarily put you off. However, bear in mind that an NDA is, in fact, a legally-binding contract. And it is generally unwise to sign any contract without having a lawyer review its wording. However, it is really impractical to pay for a lawyer to look over every NDA you’ll run into as a freelancer: the cost could in many cases be higher than the project is worth! For very large projects, say, those with values well into the four figures or higher, paying a lawyer to review the NDA may be a wise investment. But most are much smaller than this, and you will in most cases just have to take your chances and hope for the best.
Most freelancers do have to sign NDAs fairly regularly, and do so without calling a lawyer. To be honest, despite taking this short-cut, I haven’t heard of there being a lot of problems. Still, it’s not something you want to do any more than you have to. Remember that the client probably has had a lawyer write or review that NDA language—it will be designed to protect the client’s rights, not yours.
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Last Site Update: February 1, 2012
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