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How much do you really know about NDAs?

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Ruth Wentz, COO of Celebrity NDA

While you may be familiar with the term NDA from Billie Eilish’s 2021 hit song, non-disclosure agreements have been used for decades, from business meetings to protecting one’s privacy. But how much do you REALLY know about NDAs?

What is a Non-Disclosure Agreement?

A non-disclosure agreement, NDA, is a contract of law where certain information is agreed to be kept confidential. The person who signs the NDA is bound and prevented from discussing the information included in the contract with any unauthorized party. If the agreeing party breaches the contract and leaks confidential information, resolution and relief are decided by the court. Well-drafted NDAs are the key to ensuring the document can be enforced in court.

3 Types of NDAs

Unilateral NDAs are the most common types of non-disclosure agreements and are known as One-Way NDAs. This agreement requires that only one party releases confidential information to the other party. An example of this type of NDA is when companies disclose information to partners, employees, or advisors.

The second type of non-disclosure agreement is a bilateral NDA. These are referred to as Mutual or Two-Way NDAs, where both parties release their confidential information to each other. These NDAs are most often used in joint ventures and acquisitions.

Lastly, multilateral NDAs refer to agreements between three or more parties where at least one party discloses information to the other parties. These NDAs are most often used in complex business deals and negotiations.

5 Key Elements of an NDA

While non-disclosure agreements can seem long and complicated, a well-written agreement is often only a few pages long.

Key elements include:

-Identified parties

-Definition of what is considered confidential

-The scope of the confidentiality obligation by the receiving party

– Exclusions of confidential information

-Term length

An alternative dispute resolution (ADR) clause is another valuable component of an NDA. Such clauses allow parties to customize their dispute resolution process. Both standard arbitration and mediation clauses can be added to a contract. A well-written resolution clause is vital for an effective dispute resolution process.

Who uses them?

Non-disclosure agreements are widespread and valuable tools for thousands of corporations worldwide. Over one-third of the U.S. workplace uses NDAs, according to Harvard Business Review. NDAs are used in the workplace for various reasons, including senior-level business interviews, freelancer/vendors, situations involving the stock market, and employment termination to protect confidential information.

In addition to the business world, NDAs are commonplace among celebrities. According to Neil Wertlieb, a lecturer of contract law at UCLA School of Law, “NDAs are not at all uncommon for high profile individuals attempting to keep their privacy under wraps.” For example, London Reese, a tattoo artist for Julia Michaels, Pete Davidson, and Ariana Grande, stated, “I am often required to sign a non-disclosure agreement before tattooing them.”

Linsley Law Office reports NDAs are essential in Hollywood due to paparazzi prying into the personal lives of celebrities. They also noted that personal assistants are routinely asked to sign NDAs by celebrity employers. High-profile individuals have also been known to use NDAs when hosting large social events or parties. For example, it is reported that Justin Bieber hosted a party requiring all guests to sign a non-disclosure agreement with a 3 million dollar penalty clause. Various entertainment blogs have also stated an abundance of celebrities who have utilized NDAs in their personal dating lives reporting that NDAs are signed prior to beginning a romantic relationship.

NDAs are widely utilized by professional athletes. Michelle Rozzen, a sports massage therapist for Aaron Donald, NFL defensive tackle, reports mutual NDAs being instituted frequently in her field to protect the client and the therapist. In addition, high-profile families routinely employ NDAs when hiring childcare professionals. Nannies often sign NDAs to protect the privacy of the entire family. Celebrity or not, leaked information is a violation of one’s privacy.

The use of NDAs is common practice for high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals and families. For example, before a contractor or vendor enters an estate, they are required to sign an NDA and are prohibited from taking pictures. In addition, private service professionals working within an estate, such as the director of residence, chief of staff, estate manager, private security, chefs, and housekeepers, are required to sign agreements to ensure the principal’s privacy.

Furthermore, UHNW individuals expect that the professional staff with whom they entrust their yacht do not disclose information about the vessel’s value, location, or itinerary, as well as protect the identities and activities of those onboard. NDAs are often signed by yard and marina workers, sales and charter brokers, management company staff, and the captains and crew.

Franc Jansen, founder and director of JMS Yachting, says, “I know some owners have banned crew [from] using social media… Some owners have security teams who are monitoring the social media of the crew.” He further stated, “I once was asked to replace a whole deck crew. They went wakeboarding with local girls in the owner’s million-dollar tender and posted pictures of it [on social media].”

Sharing such information through social media can quickly jeopardize the safety and security of everyone. Metadata could reveal a yacht’s name and location, putting the owner, their family, and guests in danger. “This industry is the most gossipy industry that I’ve ever been involved with,” states maritime attorney John Leonida. “The owners are obsessed with confidentiality.”

When do you need a non-disclosure agreement?

Anytime you do not want detailed or sensitive information to be shared with others, whether personal or business. If a party violates your NDA, you could essentially take them to court and sue them for any damages. Remedies are available and, depending on the terms, could include an injunction to prevent further information from being disclosed. In addition, a significant benefit of these documents is that they act as a deterrent to all parties involved. NDAs are an essential tool that most people should have access to, anywhere at any time.

Are NDAs worth it?

Yes. Non-disclosure agreements are certainly worth the cost. Anytime you share sensitive information, you put yourself at risk of that information being shared and out of your control. A non-disclosure agreement will give you peace of mind and an extra layer of protection that ensures your information remains confidential.

 

Cited Sources: 

Beckett, L. (2021, July). Non-Disclosure Agreements in Yachting: What to Look Out For… Retrieved from https://www.dockwalk.com/crewlife/yacht-crew-non-disclosure-agreements-nda 

Cambridge Legal Team. (2020, April 3). Disclosing the Facts About Non-Disclosure Agreements: A Widely Used and Highly Useful Legal Tool. Retrieved from https://www.cambridgefx.com/blog/disclosing-the-facts-about-non-disclosure-agreements-a-widely- used- and-highly-useful-legal-tool/ 

D’zurilla, C. (2013, November 8). Justin Bieber party: A $3-million NDA and visits from the sheriff. Retrieved on April 6, 2021, from https://latimes.com 

Harroch, R. The Key Elements of Non-Disclosure Agreements. Retrieved from https://www.forbes.com/sites/allbusiness/2016/03/10/the-key-elements-of-non-disclosure-agreements/?sh =689dc37f627d 

Healthfield, S. (2019, July 25). How Employers Use Non-Disclosure Agreements. Retrieved from https://www.thebalancecareers.com/non-disclosure-agreement-1918197 

Kemper, E. (2017, November 9). The Purpose of Non-Disclosure Agreements and How They Could Fail Harvey Weinstein. Retrieved from https://lindleylawoffice.com/blog/2017/11/09/the- purpose-of-non-disclosure-agreements-and-how-they-could-fail-harvey-weinstein/ 

Lobel, I. (2018, January 30). NDAs Are Out of Control. Here’s What Needs to Change. Retrieved from https://hbr.org/2018/01/ndas-are-out-of-control-heres-what-needs-to-change 

NBC Los Angeles. (2018, May 3). Trump Boasts NDAs a Common Practice for ‘Celebrities and People of Wealth. Retrieved from https://nbclosangeles.com 

Preston, D. (2019, February 21). Everything a Tattoo Artist Needs to Know About Celebrities and NDAs. Retrieved from https://www.inkedmag.com 

Ross, M. (2017, July 25). Could You Be a Celebrity Nanny? Retrieved from https://care.com 

Ironclad. Types of Non-Disclosure Agreements (NDAs). Retrieved from https://ironcladapp.com/journal/contracts/types-of-nda/ 

The Talko. (2017, May 3). 15 Of the Most Messed Up Celeb NDA Clauses. Retrieved from https://the Talko.com

keynote Speaker

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Nicole Middendorf

CEO of Prosperwell Financial and Wealth Advisor with RJFS

Nicole is a money maven, a knowledge junkie, and a born coach. Nicole became an entrepreneur in 2003 when she launched her wealth management firm. She is the author of five books, the mother of two phenomenal children, a world traveler, a philanthropist, and an accomplished public speaker.

Nicole shares financial advice and real-life perspective on saving, planning, and investing with audiences across the country. Her primary goal is to take complicated subjects and make them easy to understand. She works hard to empower people to make crucial, positive changes in their own lives.

Picture of Nicole Middendorf

Nicole Middendorf

CEO of Prosperwell Financial and Wealth Advisor with RJFS

Nicole is a money maven, a knowledge junkie, and a born coach. Nicole became an entrepreneur in 2003 when she launched her wealth management firm. She is the author of five books, the mother of two phenomenal children, a world traveler, a philanthropist, and an accomplished public speaker.

Nicole shares financial advice and real-life perspective on saving, planning, and investing with audiences across the country. Her primary goal is to take complicated subjects and make them easy to understand. She works hard to empower people to make crucial, positive changes in their own lives.

Prosperwell Financial provides personalized wealth management advice to effectively guide you through every stage of life. Our advisors help to plan your way toward true financial happiness, including financial retirement planning, college education savings, estate planning, asset management, insurance, and financial divorce planning. Founded by Wealth Advisor and Certified Divorce Financial Analyst Nicole Middendorf, Prosperwell Financial serves individuals and executives all across the U.S. We help you gain the confidence needed to be in control of your financial happiness.

The Wealth Advisors at Prosperwell Financial take the time to learn about you. We want to know your goals, dreams, and desires. As a mentor and coach, we guide you through the process of discovering your financial options and possibilities. Whether that means planning for retirement, converting an IRA, working with a 401k, or wealth management services, Prosperwell Financial will have you covered.

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