Confidentially Speaking

January 27, 2016 01:36 AM

Tips for crafting a solid nondisclosure agreement

Both with his own farm family near Muscatine, Iowa, and with producers he represents, Joe Thompson is an advocate for nondisclosure agreements (NDAs). That’s particularly true in an era of big data that can be easily transferred among growers, manufacturers and vendors with the click of a button. 

“Make sure your agreements are documented so there’s no misinterpretation,” says Thompson, a partner in food and agribusiness law at Husch Blackwell in Kansas City, Mo. “That way, you don’t have to rely on a court’s interpretation of what was agreed to.”

As proprietary farm information becomes digitized and as operations look for expansion opportunities, NDAs—also known as confidentiality agreements—should be on top operators’ minds. Whether a member of your management team or a supplier is handling sensitive information, the purpose is the same: to protect the financial worth of information that frequently doesn’t have a specific dollar value. 

“You could seek one from a dealer or manufacturer,” explains Tiffany Dowell Lashmet, an agricultural law specialist with Texas A&M University Extension. “We’re also seeing the need for NDAs arising with lessees and landlords involving their rights and responsibilities related to farm data.” 

It’s OK to create a draft using online samples, she says, but have an attorney check your work before your or new farm executives—also good candidates for NDAs—sign it. 

“If you’re hiring a top manager or someone with access to your information, you don’t want that person to take that information and use it against you, or go to a competing farm,” Thompson explains.

How To Structure. Most confidentiality agreements should contain several details. First, they should define confidential information broadly, Thompson says. This ensures both parties will keep all forms of communication private.

Second, NDAs should specify the term for which the agreement is binding. Thompson sees most farm operations use a period of between two and five years, after which the agreement can be extended or allowed to sunset. 

Third, confidentiality agreements should specify the consequences of violating outlined terms, which could include lawsuits and fines. 

For protection against the whims of human nature, NDAs can be a key part of the solution.

What To Protect

Although NDAs might be new tools for many producers, the rapid influx of technology in farming makes them more relevant than ever before. Tiffany Dowell Lashmet of Texas A&M University suggests having a confidentiality agreement when:

Looking at buying or selling a business. In these cases, people will have access to critical financial information about products or services. “You may not want that to be known to everybody,” Lashmet says.

Working on sensitive or proprietary products that involve some or all of your employees. 

Sharing on-farm data with consultants and third parties.


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