Have you ever stared at the wordy jargon of a non-compete clause or a non-disclosure agreement and wished you had a law degree?
Your wish is our command - we untangle these legal knots for you, using plain language and memorable examples.
- The first step is understanding that these two are not twins, but cousins with distinct purposes.
- Non-competes are about keeping your employees from becoming your rivals.
- Meanwhile, NDAs keep your secrets, secret. We walk you through when to use each of these and why they can be crucial for your business.
The digital age has brought more than just convenience; it's also introduced new layers of complexity in the form of AI and data sharing. We delve into the updated consequences and considerations for NDAs in these uncharted waters.
With AI changing the game, it's crucial to be precise and proactive about protecting your confidential information. From screening your collaborators to restricting data flow, we provide practical insights on maintaining your information security. Plus, we highlight the value of having legal experts on your side.
Finally, to help gauge your legal readiness, we have a quiz waiting for you at BIZLEBOX.com. Join us on this journey and equip yourself to avert future legal hiccups!
Thanks for listening. Take the BIZLEBOX™ QUIZ ➡️ How Legally Prepared Are You
This podcast may be considered attorney advertising and is provided for educational and informational purposes only. This is not legal advice specific to any situations.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
In this episode, we are really going to unpack the
difference betweenconfidentiality or competition
in legal agreements, legalcontracts that surface all the
time for online business owners,especially online service
providers, as you are navigatingthe waters of non-competes and
(00:23):
non-disclosures, so join me, Iam going to unpack it, give you
some really easy to never forgetexamples and hope you can
navigate your own way throughconfidentiality or competition.
Speaker 2 (00:46):
Welcome to the Bizzle Box podcast, the go-to source
for out-of-the-box entrepreneurs.
Here you found business andlegal in a box, all neatly
packaged, helpful, withentertaining stories and
unforgettable metaphors fromlicensed attorney Tampson Horton
to design and achieve aprofitable and legally secure
business that makes an impactand allows you to fully live on
(01:10):
your terms.
Can you ever have an attorneywithout a disclaimer?
Nope, never going to happen.
Here's one just for you.
Bizzle Box provides highquality info on business and
legal issues, but to get thebest advice for your situation,
find an attorney you know likeand trust.
(01:31):
Tampson is an attorney, butshe's not your attorney.
She is my mom.
Now here's Tampson.
Speaker 1 (01:41):
Today I want to really chat with you and dive in
to two different concepts thatare often times confused and
make sense because their namesdo sound a little bit similar.
So we are going to be talkingabout non-compete clauses and
non-disclosure agreements and Ihope by the end of this episode
(02:04):
you will have a really clearpicture in your mind, when you
hear different facts andcircumstances as you are running
and operating your business,that your brain is like ding
ding ding, that's a non-compete.
Would it even apply in thissituation?
Or ding ding ding, this isnon-disclosure.
(02:24):
What do I need to be aware of?
So, as we are getting into this, I'm going to give you two
situations that showed up in myown world in the same week and
is one of the reasons that Iknew this needed to move up in
priority in terms of getting itrecorded for you.
(02:45):
So non-compete andnon-disclosures they're very
different.
They cover very different areas.
So in the first situation, Ihad a Bizzle Box member who was
in discussions with a largenational university here in the
States that happened to besponsored or affiliated with a
(03:08):
billion-dollar corporation and,because of the arrangement
between the corporation and theuniversity, they had reached out
to the Bizzle Box member andwanted to discuss purchasing a
number of licenses for theonline program for one-on-one
coaching for ongoing membership.
(03:30):
And this Bizzle Box member wassmart enough to know that they
likely needed a NDA, which is acommon abbreviation for
non-disclosure agreement, and sothey posted the question inside
Bizzle Box and thenon-disclosure was coming into
(03:55):
play as the negotiations weregetting started, and so they.
Obviously, when you'renegotiating, when you're in
discussions, sometimesconfidential information and
material surfaces.
So that's the example of anon-disclosure and we will use
that as we go through thedifferent points.
The other piece that came upwas a copywriter needed to know
(04:20):
how to navigate, being asked tosign a service provider contract
that contained a non-competeclause, and this is a very
common occurrence in the onlinerealm for both designers,
developers, copywriters in thatsomeone says great, you can
build my site or write my site,but I don't want you building or
(04:44):
writing any other sites.
That would be competitors.
Well, as you can imagine, thatis really going to limit who you
work with.
So let's, now that you kind ofhave a playing field for where
this might show up, I want towalk you through how you can
decipher and how they all comeinto play.
So when you are in the realm ofoperating your business, you
(05:10):
need to know how to compare andcontrast non-compete clauses and
non-disclosure agreements.
Now, a non-compete clause isjust that it is a clause.
It is showing up within alarger agreement.
A non-disclosure agreement canstand on its own.
(05:31):
It is not a clause, it is anactual we'll call it a big kid
document.
It can stand on its own meritsand operate as itself.
Now this is happens.
They come up all the time.
Now the primary features, whichis where I wanna start, because
this, I think, makes it easy toremember them.
(05:54):
Non-compete has to do withcompetition and what this does
is typically, this will prohibitan employee or a contractor
from providing or engaging in asimilar job that they've been
hired for, their profession,their trade, in competition
(06:15):
against the person that hiredthem, so they're employer.
Now, as you can imagine, inthis gig economy it gets really
important knowing am I anindependent contractor or am I
an employee?
Those are definitely episodesfor the future.
So non-competes are not oftengoing to show up in an
(06:41):
independent contractor situation, and I will use a very, I think
, memorable situation.
Let's imagine that you hired aplumber to come in and work on
your kitchen in your house.
You could not ask that plumberto sign a non-compete and not
(07:07):
work on anyone else's kitchen in, say, your neighborhood.
That would be ridiculous, rightLike.
That is just the mostridiculous thing.
That's similar.
When you're asking andrestricting people, you've got
to be really clear on where thecompetition is happening.
Now, primary feature of anon-disclosure this is to
(07:30):
protect confidential information.
So the parties involved agreenot to disclose confidential or
proprietary information that arebeing shared during the course
of business, during thenegotiations, during the
discussions, during the scope ofwhatever the business purpose
(07:54):
is that's going on.
So this really, especially inonline businesses, this will
really happen duringnegotiations.
Now, ndas can also show up andare a much better fit in terms
of the copywriter example thatI've given you a non-disclosure
(08:15):
agreement, as someone is hiringyou to build their website or to
create their online course orto write copy for them.
In the midst of that, you maybe privy to all kinds of
information that's not publiclyavailable.
In those situations, anon-disclosure agreement makes
(08:38):
perfect sense and anon-disclosure again driving at
the heart of confidentiality.
More often than not, yourcontract for your service
providing services that you'redoing that should have language
in it that deals really wellwith confidentiality and makes
(09:00):
you feel safe and also makes thepeople that are hiring you feel
equally as safe.
So we know the primary features.
You have non-compete, which hasto do with competition, and
then you have confidential,which has to do with keeping
stuff a secret.
Now, when you're dealing withnon-compete clauses, it also
(09:22):
will have to do with the threeT's, and this has to do.
The three T's are time, topicand territory.
Now you could also say aspecific timeframe, a
geographical scope covering thenature and scope of the business
.
I find it's easier to justremember three T's time, topic,
(09:44):
territory.
In a non-compete situation,this needs to be negotiated by
both parties, so an employerversus an employee.
If you are signing anemployment contract, you are
negotiating that non-compete.
You are aware of thatnon-compete when you are signing
(10:06):
it.
That is important because Ican't make you not work and not
compete forever.
But the amount of time that youcan't compete, the topic that
it would cover meaning thenature of the business and the
territory how much you knowgeographical area comes into
(10:29):
play, which is you can add inwith online businesses, we all
work for the entire world.
So let's look at a few of thepurposes and the benefits which
we will alluded to a little bit.
The non compete is just that.
It is aimed to stop competitionand potential threats by x
(10:52):
employees, by former contractors, and that is why because you
got information behind thescenes, you learned the trade
secrets, you learned theprocesses, you learned whatever
it might be, because you hadthat Relationship with the
(11:13):
employer, the person paying youmoney that the public didn't
have, and so, yes, you'reworking for us, but we're all
running businesses.
You know we need to keepcertain things, not public
knowledge.
That is a thousand percent okay.
The law absolutely will protectthat.
(11:34):
The NDA, on the other hand, iskeep it, keep the secret, like
keep the secrets, keep itconfidential, don't share with
competitors so you can see howthey are easily confused.
I have the information.
(11:54):
I need to keep it a secret.
So NDA is a place I have theinformation, but I can't compete
.
That's the non compete.
Now the purpose and the benefitsReally, they travel and they're
completely in line with okay.
Why don't we like these?
(12:15):
What are the potentialdrawbacks?
And for a non compete cause thereason that Courts and the law
does not like them unless theyare negotiated on both sides and
I'm Work in the situation oftwo people in an employer and
(12:36):
employee, a person with themoney, a person receiving the
money.
The reason that the law doesnot like them Is they can be
overly restrictive.
They can limit your ability towork.
They can limit your ability topursue other opportunities.
So there are Many places,especially in the states, where
(12:59):
states have basically just saidlook, they're completely
unenforceable, we're not evengoing to talk about it unless
it's fits this very narrow Set,a fax, in circumstances that is
going to be highly negotiated.
It will not be like oh whoops, Isigned that contract and
(13:21):
there's a non compete in thereand I didn't understand it.
The courts gonna grab theirMetaphorical big black sharpie
marker and just cross that out.
It's not going to come intoplay.
Now, if you are negotiating thesale of a business and there is
a legal team on both sides andpart of the sale of the business
(13:41):
is that you agree not to Launchyour competitive business right
down the street from wherethey're located, then there
could be a non compete that sayslook, within a 20 mile radius,
I agree not to set up shop.
That's a much Better set offacts and circumstances where
(14:02):
the law might even give it alittle bit of a chance of
standing and being enforceablefor a non disclosure agreement.
This is where I see so manyOnline businesses who really
think they're doing the rightthing.
(14:23):
They heard a podcast, they'vebeen in a group, they've taken a
program.
They is.
I like to say, you know justenough law to be mildly
dangerous.
I was that person during myfirst year of law school.
I knew just enough law to bemildly dangerous, and this is an
(14:45):
area that you can easilyrectify, like you can clean this
up now before you end up in asituation where it doesn't do
you any bit of good, where youthought it was going to do you
some good.
And the reason for this is, ifyou have a non-disclosure
agreement and you have notdrafted it properly, it is not
(15:06):
written properly.
It is going to likely be eitherway too broad in terms of what
can I talk about, like what isactually confidential in this or
way too narrow, not giving youenough protection.
And so when you are workingwith putting an NDA together to
(15:33):
give other people to sign, youwant to be really clear about
what's the business purpose.
What do I need to stay a secretbecause it's not currently
available to the public and alsopursue this negotiation, pursue
this opportunity, pursue thisdiscussion, whatever the case
(15:54):
may be.
So in looking at all of this, Ithink it's really, really,
really important to know whereyou think you're going to
enforce this, because that isreally going to come into play
and in the global world that weare all living in, where
(16:16):
information can go public withthe click of a mouse, it's
really important not to justknow.
Okay, here's this legaldocument that can kind of sort
of help me maintain what I want,which is limit the competition
or reign in the competition orkeep things a secret.
Remaining confidential is reallyvetting way.
(16:40):
Before you get to the point ofthe competition or the
confidentiality, who are youworking with?
Who are you sending proposalsto?
Who are you bringing in to theinner circle?
Which?
Inner circle just meaninginformation not available to the
public?
Some of it matters a lot.
(17:02):
Some of it is like, well, itdoesn't matter if it's out there
or not.
But before you get to the pointof becoming a real world
example and there are lots ofreal world examples and I
thought about running throughall kinds of real world examples
and then I realized that's notreally helpful, because you
(17:24):
change one fact in circumstancesand the whole thing could go
the other way, and I realizedwhat was really important was
this point that I try to makeexplicitly clear all the time
when I am working with onlinebusinesses, when I'm talking
through different issues thatcome up inside Bizzlebox and
that is vet who you are workingwith Don't share information
(17:49):
with 40,000 of your closestfriends.
And a situation that was broughtup with the Bizzlebox member
who needed an NDA because of thediscussions with the large
university and the billiondollar corporation was the
introduction that AI has broughtinto the equation.
(18:10):
And this is where those of youthat are loyal listeners thank
you so much know I geek outbecause the law is so vibrant it
is to me.
It's perfectly if I had to likewrap it up in a couple of words
.
It's structured flexibility.
(18:30):
It is here's your framework,but I can adapt to a wide, wide
variety of situations, and AI,as I was looking, revising
contracts which I've been doingsince you know AI became the
global powerhouse that it is andwill continue to be is making
(18:54):
sure that, especially fornon-disclosure agreements,
having very clear expectationsand wording that could be
legally enforced of.
If I'm providing confidentialinformation.
You cannot take this and dumpit into chat GPT and say, hey,
(19:15):
provide me a summary of thisridiculously long document or
help me understand whatever thismay be.
And this is definitelyproactive, it is forward
thinking.
I don't think there are anycases that have even begun to
make their way into the legalsystem on this, but I'm all
about prevent the mess athousand percent.
(19:37):
If I send you a 50 pagedocument and you're like, oh my
gosh, like I don't know whatthis is talking about, like
really, what's the gist?
Cause these things are notalways the best well-written
thing and I'm like, oh, I'm aresourceful entrepreneur, I know
how to run 87 things while I'mdoing 20 other ones.
(19:57):
I'm just gonna pop that, asection of that into chat GPT
and boom, it'll give me asummary and I can simplify the
language or whatever the casemay be.
Well, I see that as being aproblem, especially in
situations where anon-disclosure is valid and it's
warranted, because you justtook all that information and
(20:21):
dumped it, which we know it's onthe internet.
We know, once it's out there,you can't claw it back.
So that is one piece.
For those of you that have NDAs, you might wanna take a look at
them and look at it in thecontext of hmm, do we need a
(20:41):
clause in here that addresses Idon't want you dumping this into
an AI tool.
I don't want this informationout there where it can be
scooped up.
And yes, I understand that AIis nothing.
It's running analytics all thetime.
It's pulling things fromdifferent places.
(21:03):
But in certain situations, I'mpretty sure companies and
businesses like yours don't wantthat information out there on
the interweb.
So that is when the real worldexamples are filling my world
vet the people that you'rehiring, vet the people that you
(21:27):
are disclosing information tothat you are bringing into your
business and then really thinkthrough is this a situation
where I need to limit thecompetition aspect?
If it is, you need thatnegotiation at the beginning,
because you can't just toss itin at the end because the court
will likely toss it out.
(21:48):
And for non-disclosures whenyou are discussing things, when
you're bringing people in tohelp you with the sale of your
product, the building of yoursite, the writing of your copy,
all of those pieces, I thinknon-disclosures are completely
appropriate, and also now, withthe advent of AI, making sure
(22:10):
that they stay as confidentialas you want them.
So, as you are navigating theworld of online business and I
love it, I know you love it itis our vehicle for doing so much
out there in the world, forreally taking ownership and
(22:34):
creating and delivering andimpacting.
And all of those pieces knowthat Bizzlebox is here for you.
If you haven't yet hired legalfor your business team, you have
to hire a legal.
Plain and simple.
You need legal, just like youneed accounting and you need a
website and you need email.
(22:54):
All of those pieces.
Take our quiz.
It's at Bizzleboxcom.
It's a really fun quiz.
It's a pretty easy quiz.
It lets you know how legallyprepared you are and you can
really take a look at the waysthat Bizzlebox can stand in the
gap between that panickedmidnight Google search and the
(23:18):
really expensive hourly law firm, such that when you have a
situation like my Bizzleboxmember did, where it was like,
oh, I actually need some helpand put me in the right
direction, because this call ishappening today and it wasn't a
(23:40):
post that needed to happen in aFacebook group with 40,000
people that again know justenough law at times to be mildly
dangerous, helpful, but don'trealize that they're actually
hurting because theirinformation is incomplete and
knowing yep, here's the document.
(24:01):
Let's ask some clarifyingquestions.
Are we signing things yet?
Because oh, and this is onepoint I do wanna mention before
we finish up our chat today whenyou are especially for
non-disclosure agreements andthis is a sneaky, sneaky, sneaky
little trick that definitelyhappens far more in corporate
(24:23):
business or where you havebusinesses that have multiple
different arms of the business,which is becoming far more
common in a good way, and thatis making sure that the right
person and the correct legalentity is signing the NDA.
Because if I send the NDA andsomeone signs it, who's not the
(24:47):
actual legal entity or theperson that is legally
responsible for consequences ofdisclosure?
You have a worthless and the a.
You have a signed piece ofpaper.
That's lovely.
I can sign a piece of paper foryou.
I can sign it.
You know, random piece of paperin the garbage that's the
(25:07):
equivalent of it, and you willspend so much time If the
situation warrants it.
In most situations I'm gonna belike it.
The situation won't warrantthis, because we're just not
doing In a common way the natureof deals that are handled in
(25:28):
these situations and that is,hiring attorneys to then fight
it out that, nope, this personsigned, but the intention of
this document was x, y, z.
This is now no longerconfidential.
This has cost me business.
This has you know, I havesuffered specific Financial and
(25:49):
opportunistic damage type deal.
So make sure when you are usinga non disclosure agreement, I'm
not compete, not so muchbecause usually the person
that's negotiating Once what youhave, you're hiring them,
you're paying the money, they'regoing to give you the correct
information, but a sneaky,sneaky thing for non disclosures
(26:12):
, especially when there's lotsof people in the mix, where I'm
gonna use this situation at hand.
You have a national universityin the states.
So, oh my goodness, thousands,tens of thousands of people, and
you have a corporation worthbillions of dollars.
(26:34):
They for sure have lots ofdifferent arms, they have lots
of different business entities.
So it would be really easy tosay, oh Yep, I signed it, but
that person had nothing, theyweren't even the right
department, they weren't in theright area.
So I'm Totally forgot to sharethat as we were going through.
But that is another area thatyou really want to make sure
(26:57):
that you pay attention to.
So I hope that gives you alittle more clarity between non
compete, which is all aboutrestricting competition and
business likes competition.
However, we Oftentimes will doour best to create fair
competition.
We don't want to restrict it somuch so that someone can't work
(27:21):
, can't make a living, can't dowhat they are talented and
should be allowed to do.
And on disclosure, which is, ifyou had a special relationship
to be Privy to the secretiveinformation, the information not
available to the general public, then we'd really like you to
(27:42):
keep your mouth shut.
Speaker 2 (27:45):
Thanks for tuning in.
If you enjoyed this episode,please leave a review and share
it with a friend.
At the box, we love helpingentrepreneurs succeed.
We offer a variety of reliable,easy to use tools at the box
dot com.
Our goal is to help you have aprofitable and legally secure
(28:06):
business so you can make yourimpact well in, fully on your
Terms until next time.
Take what you've learned andput it to work for you.
In this episode, we are really going to unpack the
difference betweenconfidentiality or competition
in legal agreements, legalcontracts that surface all the
time for online business owners,especially online service
providers, as you are navigatingthe waters of non-competes and
(00:23):
non-disclosures, so join me, Iam going to unpack it, give you
some really easy to never forgetexamples and hope you can
navigate your own way throughconfidentiality or competition.
Speaker 2 (00:46):
Welcome to the Bizzle Box podcast, the go-to source
for out-of-the-box entrepreneurs.
Here you found business andlegal in a box, all neatly
packaged, helpful, withentertaining stories and
unforgettable metaphors fromlicensed attorney Tampson Horton
to design and achieve aprofitable and legally secure
business that makes an impactand allows you to fully live on
(01:10):
your terms.
Can you ever have an attorneywithout a disclaimer?
Nope, never going to happen.
Here's one just for you.
Bizzle Box provides highquality info on business and
legal issues, but to get thebest advice for your situation,
find an attorney you know likeand trust.
(01:31):
Tampson is an attorney, butshe's not your attorney.
She is my mom.
Now here's Tampson.
Speaker 1 (01:41):
Today I want to really chat with you and dive in
to two different concepts thatare often times confused and
make sense because their namesdo sound a little bit similar.
So we are going to be talkingabout non-compete clauses and
non-disclosure agreements and Ihope by the end of this episode
(02:04):
you will have a really clearpicture in your mind, when you
hear different facts andcircumstances as you are running
and operating your business,that your brain is like ding
ding ding, that's a non-compete.
Would it even apply in thissituation?
Or ding ding ding, this isnon-disclosure.
(02:24):
What do I need to be aware of?
So, as we are getting into this, I'm going to give you two
situations that showed up in myown world in the same week and
is one of the reasons that Iknew this needed to move up in
priority in terms of getting itrecorded for you.
(02:45):
So non-compete andnon-disclosures they're very
different.
They cover very different areas.
So in the first situation, Ihad a Bizzle Box member who was
in discussions with a largenational university here in the
States that happened to besponsored or affiliated with a
(03:08):
billion-dollar corporation and,because of the arrangement
between the corporation and theuniversity, they had reached out
to the Bizzle Box member andwanted to discuss purchasing a
number of licenses for theonline program for one-on-one
coaching for ongoing membership.
(03:30):
And this Bizzle Box member wassmart enough to know that they
likely needed a NDA, which is acommon abbreviation for
non-disclosure agreement, and sothey posted the question inside
Bizzle Box and thenon-disclosure was coming into
(03:55):
play as the negotiations weregetting started, and so they.
Obviously, when you'renegotiating, when you're in
discussions, sometimesconfidential information and
material surfaces.
So that's the example of anon-disclosure and we will use
that as we go through thedifferent points.
The other piece that came upwas a copywriter needed to know
(04:20):
how to navigate, being asked tosign a service provider contract
that contained a non-competeclause, and this is a very
common occurrence in the onlinerealm for both designers,
developers, copywriters in thatsomeone says great, you can
build my site or write my site,but I don't want you building or
(04:44):
writing any other sites.
That would be competitors.
Well, as you can imagine, thatis really going to limit who you
work with.
So let's, now that you kind ofhave a playing field for where
this might show up, I want towalk you through how you can
decipher and how they all comeinto play.
So when you are in the realm ofoperating your business, you
(05:10):
need to know how to compare andcontrast non-compete clauses and
non-disclosure agreements.
Now, a non-compete clause isjust that it is a clause.
It is showing up within alarger agreement.
A non-disclosure agreement canstand on its own.
(05:31):
It is not a clause, it is anactual we'll call it a big kid
document.
It can stand on its own meritsand operate as itself.
Now this is happens.
They come up all the time.
Now the primary features, whichis where I wanna start, because
this, I think, makes it easy toremember them.
(05:54):
Non-compete has to do withcompetition and what this does
is typically, this will prohibitan employee or a contractor
from providing or engaging in asimilar job that they've been
hired for, their profession,their trade, in competition
(06:15):
against the person that hiredthem, so they're employer.
Now, as you can imagine, inthis gig economy it gets really
important knowing am I anindependent contractor or am I
an employee?
Those are definitely episodesfor the future.
So non-competes are not oftengoing to show up in an
(06:41):
independent contractor situation, and I will use a very, I think
, memorable situation.
Let's imagine that you hired aplumber to come in and work on
your kitchen in your house.
You could not ask that plumberto sign a non-compete and not
(07:07):
work on anyone else's kitchen in, say, your neighborhood.
That would be ridiculous, rightLike.
That is just the mostridiculous thing.
That's similar.
When you're asking andrestricting people, you've got
to be really clear on where thecompetition is happening.
Now, primary feature of anon-disclosure this is to
(07:30):
protect confidential information.
So the parties involved agreenot to disclose confidential or
proprietary information that arebeing shared during the course
of business, during thenegotiations, during the
discussions, during the scope ofwhatever the business purpose
(07:54):
is that's going on.
So this really, especially inonline businesses, this will
really happen duringnegotiations.
Now, ndas can also show up andare a much better fit in terms
of the copywriter example thatI've given you a non-disclosure
(08:15):
agreement, as someone is hiringyou to build their website or to
create their online course orto write copy for them.
In the midst of that, you maybe privy to all kinds of
information that's not publiclyavailable.
In those situations, anon-disclosure agreement makes
(08:38):
perfect sense and anon-disclosure again driving at
the heart of confidentiality.
More often than not, yourcontract for your service
providing services that you'redoing that should have language
in it that deals really wellwith confidentiality and makes
(09:00):
you feel safe and also makes thepeople that are hiring you feel
equally as safe.
So we know the primary features.
You have non-compete, which hasto do with competition, and
then you have confidential,which has to do with keeping
stuff a secret.
Now, when you're dealing withnon-compete clauses, it also
(09:22):
will have to do with the threeT's, and this has to do.
The three T's are time, topicand territory.
Now you could also say aspecific timeframe, a
geographical scope covering thenature and scope of the business
.
I find it's easier to justremember three T's time, topic,
(09:44):
territory.
In a non-compete situation,this needs to be negotiated by
both parties, so an employerversus an employee.
If you are signing anemployment contract, you are
negotiating that non-compete.
You are aware of thatnon-compete when you are signing
(10:06):
it.
That is important because Ican't make you not work and not
compete forever.
But the amount of time that youcan't compete, the topic that
it would cover meaning thenature of the business and the
territory how much you knowgeographical area comes into
(10:29):
play, which is you can add inwith online businesses, we all
work for the entire world.
So let's look at a few of thepurposes and the benefits which
we will alluded to a little bit.
The non compete is just that.
It is aimed to stop competitionand potential threats by x
(10:52):
employees, by former contractors, and that is why because you
got information behind thescenes, you learned the trade
secrets, you learned theprocesses, you learned whatever
it might be, because you hadthat Relationship with the
(11:13):
employer, the person paying youmoney that the public didn't
have, and so, yes, you'reworking for us, but we're all
running businesses.
You know we need to keepcertain things, not public
knowledge.
That is a thousand percent okay.
The law absolutely will protectthat.
(11:34):
The NDA, on the other hand, iskeep it, keep the secret, like
keep the secrets, keep itconfidential, don't share with
competitors so you can see howthey are easily confused.
I have the information.
(11:54):
I need to keep it a secret.
So NDA is a place I have theinformation, but I can't compete
.
That's the non compete.
Now the purpose and the benefitsReally, they travel and they're
completely in line with okay.
Why don't we like these?
(12:15):
What are the potentialdrawbacks?
And for a non compete cause thereason that Courts and the law
does not like them unless theyare negotiated on both sides and
I'm Work in the situation oftwo people in an employer and
(12:36):
employee, a person with themoney, a person receiving the
money.
The reason that the law doesnot like them Is they can be
overly restrictive.
They can limit your ability towork.
They can limit your ability topursue other opportunities.
So there are Many places,especially in the states, where
(12:59):
states have basically just saidlook, they're completely
unenforceable, we're not evengoing to talk about it unless
it's fits this very narrow Set,a fax, in circumstances that is
going to be highly negotiated.
It will not be like oh whoops, Isigned that contract and
(13:21):
there's a non compete in thereand I didn't understand it.
The courts gonna grab theirMetaphorical big black sharpie
marker and just cross that out.
It's not going to come intoplay.
Now, if you are negotiating thesale of a business and there is
a legal team on both sides andpart of the sale of the business
(13:41):
is that you agree not to Launchyour competitive business right
down the street from wherethey're located, then there
could be a non compete that sayslook, within a 20 mile radius,
I agree not to set up shop.
That's a much Better set offacts and circumstances where
(14:02):
the law might even give it alittle bit of a chance of
standing and being enforceablefor a non disclosure agreement.
This is where I see so manyOnline businesses who really
think they're doing the rightthing.
(14:23):
They heard a podcast, they'vebeen in a group, they've taken a
program.
They is.
I like to say, you know justenough law to be mildly
dangerous.
I was that person during myfirst year of law school.
I knew just enough law to bemildly dangerous, and this is an
(14:45):
area that you can easilyrectify, like you can clean this
up now before you end up in asituation where it doesn't do
you any bit of good, where youthought it was going to do you
some good.
And the reason for this is, ifyou have a non-disclosure
agreement and you have notdrafted it properly, it is not
(15:06):
written properly.
It is going to likely be eitherway too broad in terms of what
can I talk about, like what isactually confidential in this or
way too narrow, not giving youenough protection.
And so when you are workingwith putting an NDA together to
(15:33):
give other people to sign, youwant to be really clear about
what's the business purpose.
What do I need to stay a secretbecause it's not currently
available to the public and alsopursue this negotiation, pursue
this opportunity, pursue thisdiscussion, whatever the case
(15:54):
may be.
So in looking at all of this, Ithink it's really, really,
really important to know whereyou think you're going to
enforce this, because that isreally going to come into play
and in the global world that weare all living in, where
(16:16):
information can go public withthe click of a mouse, it's
really important not to justknow.
Okay, here's this legaldocument that can kind of sort
of help me maintain what I want,which is limit the competition
or reign in the competition orkeep things a secret.
Remaining confidential is reallyvetting way.
(16:40):
Before you get to the point ofthe competition or the
confidentiality, who are youworking with?
Who are you sending proposalsto?
Who are you bringing in to theinner circle?
Which?
Inner circle just meaninginformation not available to the
public?
Some of it matters a lot.
(17:02):
Some of it is like, well, itdoesn't matter if it's out there
or not.
But before you get to the pointof becoming a real world
example and there are lots ofreal world examples and I
thought about running throughall kinds of real world examples
and then I realized that's notreally helpful, because you
(17:24):
change one fact in circumstancesand the whole thing could go
the other way, and I realizedwhat was really important was
this point that I try to makeexplicitly clear all the time
when I am working with onlinebusinesses, when I'm talking
through different issues thatcome up inside Bizzlebox and
that is vet who you are workingwith Don't share information
(17:49):
with 40,000 of your closestfriends.
And a situation that was broughtup with the Bizzlebox member
who needed an NDA because of thediscussions with the large
university and the billiondollar corporation was the
introduction that AI has broughtinto the equation.
(18:10):
And this is where those of youthat are loyal listeners thank
you so much know I geek outbecause the law is so vibrant it
is to me.
It's perfectly if I had to likewrap it up in a couple of words
.
It's structured flexibility.
(18:30):
It is here's your framework,but I can adapt to a wide, wide
variety of situations, and AI,as I was looking, revising
contracts which I've been doingsince you know AI became the
global powerhouse that it is andwill continue to be is making
(18:54):
sure that, especially fornon-disclosure agreements,
having very clear expectationsand wording that could be
legally enforced of.
If I'm providing confidentialinformation.
You cannot take this and dumpit into chat GPT and say, hey,
(19:15):
provide me a summary of thisridiculously long document or
help me understand whatever thismay be.
And this is definitelyproactive, it is forward
thinking.
I don't think there are anycases that have even begun to
make their way into the legalsystem on this, but I'm all
about prevent the mess athousand percent.
(19:37):
If I send you a 50 pagedocument and you're like, oh my
gosh, like I don't know whatthis is talking about, like
really, what's the gist?
Cause these things are notalways the best well-written
thing and I'm like, oh, I'm aresourceful entrepreneur, I know
how to run 87 things while I'mdoing 20 other ones.
(19:57):
I'm just gonna pop that, asection of that into chat GPT
and boom, it'll give me asummary and I can simplify the
language or whatever the casemay be.
Well, I see that as being aproblem, especially in
situations where anon-disclosure is valid and it's
warranted, because you justtook all that information and
(20:21):
dumped it, which we know it's onthe internet.
We know, once it's out there,you can't claw it back.
So that is one piece.
For those of you that have NDAs, you might wanna take a look at
them and look at it in thecontext of hmm, do we need a
(20:41):
clause in here that addresses Idon't want you dumping this into
an AI tool.
I don't want this informationout there where it can be
scooped up.
And yes, I understand that AIis nothing.
It's running analytics all thetime.
It's pulling things fromdifferent places.
(21:03):
But in certain situations, I'mpretty sure companies and
businesses like yours don't wantthat information out there on
the interweb.
So that is when the real worldexamples are filling my world
vet the people that you'rehiring, vet the people that you
(21:27):
are disclosing information tothat you are bringing into your
business and then really thinkthrough is this a situation
where I need to limit thecompetition aspect?
If it is, you need thatnegotiation at the beginning,
because you can't just toss itin at the end because the court
will likely toss it out.
(21:48):
And for non-disclosures whenyou are discussing things, when
you're bringing people in tohelp you with the sale of your
product, the building of yoursite, the writing of your copy,
all of those pieces, I thinknon-disclosures are completely
appropriate, and also now, withthe advent of AI, making sure
(22:10):
that they stay as confidentialas you want them.
So, as you are navigating theworld of online business and I
love it, I know you love it itis our vehicle for doing so much
out there in the world, forreally taking ownership and
(22:34):
creating and delivering andimpacting.
And all of those pieces knowthat Bizzlebox is here for you.
If you haven't yet hired legalfor your business team, you have
to hire a legal.
Plain and simple.
You need legal, just like youneed accounting and you need a
website and you need email.
(22:54):
All of those pieces.
Take our quiz.
It's at Bizzleboxcom.
It's a really fun quiz.
It's a pretty easy quiz.
It lets you know how legallyprepared you are and you can
really take a look at the waysthat Bizzlebox can stand in the
gap between that panickedmidnight Google search and the
(23:18):
really expensive hourly law firm, such that when you have a
situation like my Bizzleboxmember did, where it was like,
oh, I actually need some helpand put me in the right
direction, because this call ishappening today and it wasn't a
(23:40):
post that needed to happen in aFacebook group with 40,000
people that again know justenough law at times to be mildly
dangerous, helpful, but don'trealize that they're actually
hurting because theirinformation is incomplete and
knowing yep, here's the document.
(24:01):
Let's ask some clarifyingquestions.
Are we signing things yet?
Because oh, and this is onepoint I do wanna mention before
we finish up our chat today whenyou are especially for
non-disclosure agreements andthis is a sneaky, sneaky, sneaky
little trick that definitelyhappens far more in corporate
(24:23):
business or where you havebusinesses that have multiple
different arms of the business,which is becoming far more
common in a good way, and thatis making sure that the right
person and the correct legalentity is signing the NDA.
Because if I send the NDA andsomeone signs it, who's not the
(24:47):
actual legal entity or theperson that is legally
responsible for consequences ofdisclosure?
You have a worthless and the a.
You have a signed piece ofpaper.
That's lovely.
I can sign a piece of paper foryou.
I can sign it.
You know, random piece of paperin the garbage that's the
(25:07):
equivalent of it, and you willspend so much time If the
situation warrants it.
In most situations I'm gonna belike it.
The situation won't warrantthis, because we're just not
doing In a common way the natureof deals that are handled in
(25:28):
these situations and that is,hiring attorneys to then fight
it out that, nope, this personsigned, but the intention of
this document was x, y, z.
This is now no longerconfidential.
This has cost me business.
This has you know, I havesuffered specific Financial and
(25:49):
opportunistic damage type deal.
So make sure when you are usinga non disclosure agreement, I'm
not compete, not so muchbecause usually the person
that's negotiating Once what youhave, you're hiring them,
you're paying the money, they'regoing to give you the correct
information, but a sneaky,sneaky thing for non disclosures
(26:12):
, especially when there's lotsof people in the mix, where I'm
gonna use this situation at hand.
You have a national universityin the states.
So, oh my goodness, thousands,tens of thousands of people, and
you have a corporation worthbillions of dollars.
(26:34):
They for sure have lots ofdifferent arms, they have lots
of different business entities.
So it would be really easy tosay, oh Yep, I signed it, but
that person had nothing, theyweren't even the right
department, they weren't in theright area.
So I'm Totally forgot to sharethat as we were going through.
But that is another area thatyou really want to make sure
(26:57):
that you pay attention to.
So I hope that gives you alittle more clarity between non
compete, which is all aboutrestricting competition and
business likes competition.
However, we Oftentimes will doour best to create fair
competition.
We don't want to restrict it somuch so that someone can't work
(27:21):
, can't make a living, can't dowhat they are talented and
should be allowed to do.
And on disclosure, which is, ifyou had a special relationship
to be Privy to the secretiveinformation, the information not
available to the general public, then we'd really like you to
(27:42):
keep your mouth shut.
Speaker 2 (27:45):
Thanks for tuning in.
If you enjoyed this episode,please leave a review and share
it with a friend.
At the box, we love helpingentrepreneurs succeed.
We offer a variety of reliable,easy to use tools at the box
dot com.
Our goal is to help you have aprofitable and legally secure
(28:06):
business so you can make yourimpact well in, fully on your
Terms until next time.
Take what you've learned andput it to work for you.
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