Skip to content

Definition: Non-Disclosure Agreement

What is a Non Disclosure Agreement

Companies often need to keep information private. Trade secrets e.g. a secret blend of 37 herbs and spices, financially sensitive information, or new product development plans that need to be kept out of the hands of competitors.

Of course, the best way to keep information private is to not share it in the first place. But often the natural course of business means collaboration and sharing. This is where a Confidentiality Agreement, or Non-Disclosure Agreement (NDA), can be very valuable.

Business’ well often want to make sure that employees don’t pass on information carelessly or negligently to those they shouldn’t. But what about people who aren’t your employees? Or other organisations? Sometimes a business will need to work with partners, consultants, suppliers and customers in order to develop and execute their strategic plans. A business can help to keep a lid on trade secrets by having an NDA in place with the various organisations it works with.

What to include in a Non Disclosure Agreement?

The agreement should make clear who is bound by the agreement (e.g. a Company and the Recipient), as well as provide background information as to why the agreement is needed. The usual definition of terms should be used to help provide clarity and brevity.

The document will define what information is considered to be confidential and how that information may be used by the recipient.

It is crucially important to define the information that is considered confidential. Is it any and all information that the Company may provide to the Recipient, or just on certain subjects? Then what happens if a breach occurs – the document should then discuss what appropriate remedial steps would need to be taken by the Recipient. Would any damages apply or be sought?

There are then lots of other details to be worked out. Do any exceptions apply? Any warranty regarding the accuracy of the information provided to the Recipient? How will the Company enforce the agreement? How could the contract be terminated? Can Amendments be made / How can amendments be made – and who needs to be notified of changes to the agreement?

When might a Non Disclosure AgreemenT be used?

Often there will be a confidentiality clause within a business contract – such as an employee, partnership agreement, or contract to supply goods and services. However, if two people or organisations do not yet have any other agreement in place, then an NDA may be drafted and signed first. By doing so a legal-framework is created to enable discussion and negotiation to take place in regards to any future business contract. Examples of when you might use an NDA:

  • Hiring employees or contractors
  • Before entering into discussions for a contract
  • Running market research activities
  • Procurement activities

[/end of article]

More resources for the NDA business document:

NDA Non-Disclosure agreement TEMPLATE AND DOWNLOADS

A Non-Disclosure Agreement template and example. The template includes an undertaking, makes it clear who owns the information, what measures need to be taken to protect it, what must be done if a breach occurs, and that the signing of the agreement does not constitute a promise of future work. The agreement should also include clauses for termination, waivers, exceptions, amendments and notices. The template can be downloaded as a PDF, InDesign or Word file.

Non-Disclosure Agreement (NDA) document template >