Why you need an NDA!

You might have realised our NDA is free on our website http://www.lenoma.co.za (direct link is here Basic NDA.)

But what’s the big deal about NDAs so how do you use it or for what is it for exactly and how it’ll benefit you?

There are many benefits and advantages for using an NDA:

1) The most obvious advantage of an NDA is protecting your information!

An NDA agreement allows you to agree on what information can and cannot be disclosed to others;

what each party’s obligations are in regards to the confidential information;

and how information is dealt with upon termination of the NDA.

2) An NDA agreement can allow parties to define what “confidential information” is, so that it is clear to both parties throughout their relationship what is considered confidential and what subsequently cannot be disclosed.

What type of information can be considered ‘confidential’ is endless, and it can include anything from patent ideas, test scores, employee information, passwords etc.

Setting out what is included as confidential information can save a lot of time in the event a dispute arises and a lawsuit is brought, as the judge can see whether the information disclosed is specifically listed or described in the NDA.

Drafters of the NDA can be as precise as they wish when defining what is confidential in their agreement by including an exhaustive list of specific items.

Others will want a broader, non-exhaustive list which may include language such as “all information disclosed in the course of fulfilling the purpose of the agreement”.

Drafters can also include exceptions to the prohibitions on disclosure such as information that is generally available to the public;

information obtained by a third party who is not bound by any confidentiality agreements;

where information is trivial;

information developed for the recipient independently;

information disclosed through no fault of the recipient party and information that was already known by the party before signing the NDA.

These exceptions are common in NDAs.

3) A well-drafted NDA will outline the consequences for those that breach the NDA, which will likely include a hefty monetary fine.

The party that breached the NDA can also be subject to a court order preventing them from continuing to disclose any confidential information that was protected by the NDA.

4) An NDA assures parties that information will remain confidential, and can include survival provisions requiring the party to not disclose the confidential information for a stated time period (eg. 2 years) after their relationship has ended.

Takeaways

– If you are considering a business deal, try to have the other party review and sign an NDA before entering into business discussions and possibly exchanging confidential information. The sooner the better!

– Pay close attention to the definition of confidential information before signing an NDA, so you are clear what information (of yours) is protected, and what information (of the other party) cannot be disclosed to others.

Hope this helps you in your business journey!

Team Lenoma Legal

http://www.lenoma.co.za

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5 contract clauses in any Legal Agreement you should look into.

Here are 5 basic contract sections that you should review carefully before signing the contract.

1. The parties to the contract.

This section of the contract is important because it tells you who they are entering into an agreement with.

– Is it another person or several people? Is it a business?

– Are you signing the contract on behalf of their business or in an individual capacity?

Are the names of all parties spelled correctly?

2. The “money” terms.

This section of the contract is important because it deals with the money.

Does it clearly lay out how much a good or service will cost?

When, how much, and how long will you have to pay the other party or will the other party have to pay?

3. Jurisdiction and Governing Law.

This section of the contract explains what law applies to the contract and the location where a dispute must be brought if there is a disagreement

Jurisdictions or countries may have different laws, so knowing which law applies to your contract is critical to understanding your rights.

4. Attorney’s Fees.

Some contracts have a section that states that a losing party in a dispute has to pay the winning party’s attorney’s fees and costs. This is an important section to you because you may be able to get their attorney’s fees reimbursed if a dispute arises out of the contract and you win.

5. Signature page.

This section of the contract is so obvious that it often gets overlooked.

Did all of the parties sign the contract?

These are just a few of the sections that your potential client should carefully review prior to signing a contract. However, every section of a contract is important.

If the contract is still confusing to you, at least they still have you to review it with us or any of our partner law firms.

Get a copy any business agreement here at Lenoma Legal eShop.

Commercial Leases 

If you own a business, chances are you may need to consider entering into a commercial lease. So how do these differ from ordinary, residential leases?

There are a number of things you need to look out for. This article will cover the four most important things to look out for before signing the dotted line.

1 . Terms of the Lease and Options

The term of the lease is extremely important for business tenants. There often exists a conflict of interest between landlords and tenants with regard to the terms of leases so it is important to be informed and look out for your best interests.

Generally, landlords prefer the security of a longer term lease (for example, 5 or 10 years), whereas tenants usually prefer the flexibility afforded by a shorter lease (3 years is about standard). This is especially the case for start-up business tenants who commonly either go out of business or rapidly expand and require a new lease to expand operations in the near future. Keep in mind that, as mentioned, if the relevant retail lease legislation applies to your lease, there may be restrictions upon the minimum term of your lease.

Another important consideration is whether the lease provides you with an option to renew at the end of the initial term so you have the option to continue trading. This is very important for commercial leases as a large proportion of your businesses’ goodwill may be attached to your premises, so you may want to protect this.

2. Rent and Security

The rent clause is probably the most obviously important aspect of any lease agreement. When it comes to paying out expenses, we all want to keep it to a minimum! The rent clause specifies the the amount of money the tenant must pay to the landlord in return for the landlord providing the use and occupation of the property. Rent is a significant operating expense for most businesses.

The rent for the initial term, as well as any changes to the rent, must be specified in the lease. The most common methods of rent review (i.e. changes in rent) are consumer price index (CPI), fixed percentage increase and market rent. It is important to ensure you will be able to afford any proposed rent increases during the period of your lease and any renewal period to avoid falling behind.

The landlord may also request a security payment from the tenant to protect against the tenant failing to pay rent (i.e. defaulting). This would either be in the form of a bank guarantee by an individual tenant, or a personal guarantee by a company tenant’s directors. The security deposit can be a significant amount of money, usually equal to three to six months’ rent. Therefore, you shouldn’t forget this cost when assessing the affordability of your commercial lease.

3. Termination

Lastly, you should also review the termination clause contained in your commercial lease. Keep an eye out for any clause which allows the landlord to terminate the lease before the end of the term. In most cases, it is highly advised that you seek to have this removed as it causes uncertainty of your lease which can be very damaging for your business. Further, you should be aware of any other circumstances which will cause your lease to be terminated.

Get Advice from a Professional

There are clearly some very important things to look out for when entering a commercial lease for your business.

Each of these factors has the potential to have a major impact on the performance of your business, so it is worth looking into obtaining independent legal advice to protect your best interests. As a potential tenant, if you are unhappy with any aspect of your lease agreement, you should negotiate with your landlord to reach an agreement that suits your needs.

What is a Non-Disclosure Agreement though? 

A non-disclosure agreement (NDA) is a contract to keep a secret. 

A non-disclosure agreement is often used when two companies or persons want to meet to discuss a joint opportunity involving the exchange of confidential information. An NDA is especially useful when discussing an invention with a prospective licensee.

This non-disclosure agreement then, would be an agreement between you and a potential licensee in which you exchanged your invention for a promise by the licensee to keep the invention secret.

A non-disclosure agreement may be unilateral, that is, one person is bound by the obligation to keep a secret, or it may be mutual, in which both parties have an obligation to keep the secrets of the other disclosing party. As in all contracts, both parties must receive a benefit; this benefit is called consideration. In the case in which you are disclosing your invention to a potential licensee for the promise of keeping your invention secret, the benefit received by the potential licensee is to learn of your invention, knowledge that he would not have otherwise had but for the exchange of the agreement. The benefit that you receive under this non-disclosure agreement is that, in exchange for disclosing your invention, the licensee or receiving party promises to keep the information secret. In this case, the consideration is the exchange of information for the promise.

Anatomy of an NDA

Non-disclosure agreements are generally not particularly complex, and most such agreements contain several basic components or parts. At the beginning of the general non-disclosure agreement is a preamble or paragraph identifying the parties. The next section of a typical non-disclosure agreement includes definitions of terms that are used in the agreement.

Such terms might include the words “proprietary information,” “trade secrets” and “protected technology.” Any other terms that might be either ambiguous or key terms of the agreement are often also defined in this terms section.

The next section found in the typical non-disclosure agreement is the exclusions section. The exclusions section generally contains five or six different carve-outs to secrets or confidential information that is not covered by the non-disclosure agreement.

The first of these is typically information that is already public or has become public through no fault of the receiving party. Information that might be thus characterized as confidential information in disclosure meeting and marked confidential is not covered under the agreement if that information is already known by the public.

A second carve-out to the non-disclosure agreement is typically information that, as of the time of receipt by the receiving party, is already known to or in the possession of the receiving party. That is to say, if under a non-disclosure agreement you give me information that I already know, you cannot force me to keep it secret by this NDA obligation.

A third typical carve-out in an NDA is information that at any time is received in good faith by the receiving party from a third party that was lawfully in possession of the information and had the right to disclose the same.

If you and I enter into a non-disclosure agreement and you give me confidential information pursuant to that agreement but I then purchase technology from a third party and as part of that purchase receive the same information that you and I agreed would be held private, then I no longer have the obligation to keep that information confidential because I have received it from a third party who had no obligation with you to keep that information confidential. 

The summary of this particular carve-out is that if I get information from somebody else who knows about it and who received that information lawfully, my obligation to you to keep it secret no longer exists.

A fourth carve-out to the non-disclosure agreement typically is information that is disclosed to third parties by the disclosing party on a non-confidential basis, that is, if you give me information under the non-disclosure agreement but then you pass the same information on to third parties on a non-confidential basis, then I no longer have that obligation to keep that information secret.

A fifth carve-out that is typically included in a non-disclosure agreement is information that is independently developed by or on behalf of the receiving party without benefit of the transferred confidential information.

This occasionally happens in large companies where you pass information on to me under a non-disclosure agreement, and another division of my company, without ever having received the confidential information, develops the same confidential information or the same technology independently. This independent development relieves me of the responsibility to keep that information confidential under the agreement.

In addition to the term that lists a number of carve-outs to the non-disclosure agreement, the typical NDA includes a number of other terms, including a term that each party shall use the same reasonable efforts to protect the confidential information as are used to protect its own proprietary information.

Related to this is often a requirement that the disclosure of the confidential information shall be restricted to those individuals in the company who are directly participating in the review of the information and have a need to know such information.

Another term in the agreement might clarify that execution of the agreement does not give a license or other transfer of proprietary rights to the technology, but only is construed to be a sharing of information.

Life Expectancy

Most non-disclosure agreements have a period of time of effectiveness of the information. This time period or term of the agreement is one, two, three or some finite number of years. The reason for this is that as time goes on, it becomes increasingly difficult to protect confidential information, as memories of the agreement and changes in personnel often result in accidental dissemination of the confidential information. It is also understood that confidential information typically has a relatively short period of viability.

Over time, the value of trade secrets and other technical information diminishes as others independently develop or are able to reverse-engineer products to learn of the trade secrets. Trade secrets naturally disseminate as employees move from company to company, understanding, of course, that there are some trade secrets that can last many years, such as the formula for Coca-Cola©, but generally most confidential agreements expire after some period of time. The non-disclosure agreements are typically signed by both parties and may include an exhibit attached to the end of the NDA, describing in broad terms the specific confidential information that is being exchanged.

NDA is still our #Docoftheweek  get yours today by simply contacting us on info@lenoma.co.za for only  R250 this week

Team Lenoma Legal 

http://www.lenoma.co.za

The benefits of a NON-DISCLOSURE AGREEMENT 

Non-disclosure agreements are extremely common. However, many people are not sure what they are, why they are needed and how they can help a business.

A non-disclosure agreement can be made between a business and any party it works with.

This can be an employee, lender, independent contractor or manufacturer. The agreement limits what the individual can say about the company, including disclosing what they are working on for the company. 

KEEP A COMPETITIVE EDGE

One of the biggest benefits to a non-disclosure agreement is that they help you keep your competitive edge. Employees can’t discuss your company secrets or projects with other businesses if they’ve signed a non-disclosure agreement.

This helps you keep projects under wraps until they can be patented or further developed. It also ensures other companies don’t take your ideas or your plans.

MAINTAIN CONFIDENTIALITY

Another significant benefit of non-disclosure agreements is that they help your business maintain confidentiality. No one needs to know what loans you apply for, which products are selling or failing, or how your business runs its day to day operations. Unfortunately, without this agreement, your employees can share this information with anyone they wish, including newspapers and competitors.

 A non-disclosure agreement may also help keep disgruntled employees from negatively discussing your business or products, which is crucial.


PROTECT NEWS ON GROWTH

The last benefit to a non-disclosure agreement is that it helps protect the growth of your business from being made public if you are not a publicly traded company. If your business is struggling to pay bills or you are downsizing, this can look bad to vendors or suppliers. They may cut your credit terms or refuse to do business with you for fear of not getting paid. 

With a non-disclosure agreement in place, you have time to get your affairs in order and quietly reorganize. Likewise, you may not want to brag about your company’s growth or projected growth, as vendors or suppliers may be tempted to raise costs on you if they know you have more cashflow. A non-disclosure agreement with vendors, manufacturers and employees also keeps this quiet.

WRITING YOUR NON-DISCLOSURE AGREEMENT

The benefits of this document are clear. However, many businesses draw up their own, without realizing that the wording in the contract may not be legally binding. This negates the benefits of this type of legal document.

An NDA is our #DocOfTheWeek. Get yours for only this week for R250

Contact us on info@lenoma.co.za to get yours today.

http://www.lenoma.co.za

Legal mistakes to AVOID 

Everyone makes mistakes because no one is perfect. Most mistakes can be corrected. But there are some mistakes that can be fatal, especially when it comes to the handling of legal matters. Here are five common fatal legal mistakes and how you can avoid them.


Not Responding To A Letter of demand 

If someone serves you with a letter of demand (a formal legal document that describes legal and factual allegations made by one party against another party), you are required by law to respond to it within a certain period of time. Failing to respond is fatal because someone can ultimately obtain a judgment against you, which leads into the next fatal legal mistake people make.

Allowing A Judgment To Be Entered Against You.

Allowing a judgment to be entered against you can occur for reasons stated in #1 above, by losing a case, or by failing to take the appropriate actions in a case. Once a judgment is entered against you, your valuable possessions such as your home, your business, money in your bank accounts, and even your hard-earned wages are at risk of being taking from you.

Not Having An Attorney When The Other Party Does.

Most do-it-yourselfers believe they can win a case against the other party or handle a legal matter without having an attorney, even when the other party has an attorney. Whether its arrogance or ignorance, most do-it-yourselfers end up learning the hard way that the legal system is complex and merciless.

Signing A Contract Without Understanding It.

Signing a binding legal document such as an apartment lease or an employee contract without understanding the terms in the documents can be fatal. Unfortunately, the consequences of signing a contract are often unknown until an event occurs, such as when a landlord fails to make maintenance repairs to your apartment or your supervisor threatens to fire you. But by that time it is often too late.

Not Having A Written Contract At All.

Perhaps worse than signing a contract without understanding it is not having a written contract at all. The truth of the matter is that people say one thing and do another. Additionally, if a dispute arises out of a verbal agreement, it is hard for a judge to determine what the parties actually agreed to and who is right and wrong. At the very least, a written contract can help the parties clearly understand what their rights and duties are. For these reasons, it is better to avoid the verbal agreements as much as possible and enter into a written contract.

You can easily avoid these fatal legal mistakes by getting the right legal help. By speaking with and hiring the right attorney, you put yourself in a better position to have your legal matters handled properly and mistakes eliminated.

Need to be linked with an attorney in your area?

Drop us an email on info@lenoma.co.za or call us on +27 74 560 8063.

Team Lenoma Legal 

http://www.lenoma.co.za

4 Legal agreements EVERY business must have

Nobody likes legal documents — especially business owners who are multitasking and trying to manage the company’s financial health, marketing, sales, teams’ health and and and…. 

If you have these 4 legal documents in order you, don’t need to worry about the rest if you don’t want to (although all are nice to have).

Let’s make your business legal life easier….

Here is all you need:

1.  A will

Every business owner needs a business will separate from her or his personal will. Preparing a will not only concerns your assets but allows you to take care of your final affairs in the way that you want to. A will is important for your business to be protected and for your family to receive enough funds to be able to sustain their lifestyle. Whatever the fate of your business might be, it’s you who should decide it.

2. Power of Attorney

On many occasions disease, accidents and incapacitation can strike faster than we can react. When a business owner cannot run the business because of health or personal issues, it is imperative that he continues to provide for his staff, partners and customers. This can most easily be done through a power of attorney. This document can be designed so that it is activated only if the business owner is not able to take decisions or take care of his or her own affairs. You can be in control even when your life is out of control by choosing who will operate it in your place.

3. Contracts

Okay, you got us. This is not one single legal document but multiple templates for business relationships. You need several types of contracts that will make interacting with people easier – supplier contracts, client contracts, lease agreements, employment and termination contracts, confidentiality agreements and contractor contracts. If you do not have contracts, be sure that the other side will have. And the contracts their lawyers drafted won’t protect your business interest, that’s for sure.

4.  IP agreement

An intellectual property agreement shows your investors that you own the IP you will be working with. Before you can have such an agreement, you need to legally protect your IP. This includes trademarks, applications, designs, written, video and audio content, business blueprints, strategies and processes. Everything that allows you to be different from your competition and operate your business in the way you do is your intellectual property and should be legally protected. Your IP agreement shows investors and shareholders that you have taken care of that.

Act smart have these legal documents drafted as soon as you start your business. But you will be even smarter if you have them reviewed annually to make sure they reflect the growth and changes in the business.

You can find us on www.lenoma.co.za or info@lenoma.co.za if you have any questions.

Use #lenomalegal on social media to find us😉!