NDA (Non-Disclosure Agreement): Definition, Example and Related Terms
What is an NDA (Non-Disclosure Agreement) ?
A legal agreement in which one party agrees to keep certain information confidential. NDAs are commonly used to protect trade secrets and other prorietary information from being disclosed to competitors or the general public.
What is the difference between an NDA and a Confidentiality AgreementAn NDA is a type of confidentiality agreement focused on preventing unauthorized disclosure of information. While both terms are often used interchangeably, a confidentiality agreement could be used with other obligations, such as during a consultancy where the consultant is also prohibited from using the client's information for their own benefit.
- The employee signed a non-disclosure agreement as part of his contract.
Use-Case Description Employment It is common practice that new employees joining a company will be required to sign an NDA to protect trade serets and proprietary company information. This is particularly common in technology, pharmaceuticals and finance. Mergers and Acquisitions (M&A) During the due diligence process of mergers and acquisitions, NDAs are signed by both parties to ensure that financial records, busniess strategies, and other sensitive information are not leaked Business Partnerships and Joint Ventures When companies or individuals enter into joint ventures or partnerships, they may share sensitive data with each other that they want to keep confidential from third parties. For example Two companies collaborating together to develop a new technology. Consulting Services Consultants often sign NDAs as they frequently have access to sensitive information as part of thier role in evaluating or improving a business.