Non-disclosure agreement (NDA)
What is a non-disclosure agreement?
A non-disclosure agreement (NDA) keeps trade secrets secret. If a business does not want to share confidential information they will ensure that employees and other business parties sign an NDA to make sure the other party doesn't pass information.
Where have you heard about non-disclosure agreements?
Lots of businesses use NDAs, also known as confidentiality agreements, for a variety of reasons to protect an invention, or when sharing information about a business with a prospective buyer, for example. Employees may also be asked to sign them.
What you need to know about non-disclosure agreements.
NDAs also arise between an investor and a company seeking funding, as any contract may include a go-to-market strategy and sales plan, potential customers, a manufacturing process or proprietary software.
There are two types of NDA:
- One-sided or unilateral: this is where one party agrees not to disclose information about another. This is the more common type of NDA
- Mutual: This is where you both agree not to disclose confidential information about each other
An NDA needs to set out the scope of the agreement, identifying the parties concerned, and detail what's considered confidential and what's excluded. It also needs to say how long the agreement will last.
If an NDA is breached, it's possible to sue and claim damages.