Business, Legal & Accounting Glossary
A legally binding contract in which a person or business promises to treat specific information as a trade secret and not disclose it to others without proper authorization. Nondisclosure agreements are often used when a business discloses a trade secret to another person or business for such purposes as development, marketing, evaluation or securing financial backing. Although nondisclosure agreements are usually in the form of written contracts, they may also be implied if the context of a business relationship suggests that the parties intended to make an agreement. For example, a business that conducts patent searches for inventors is expected to keep information about the invention secret, even if no written agreement is signed, because the nature of the business is to deal in confidential information.
A non-disclosure agreement (NDA), also called a confidential disclosure agreement (CDA), confidentiality agreement or secrecy agreement, is a legal contract between at least two parties that outlines confidential materials or knowledge the parties wish to share with one another for certain purposes, but wish to restrict from generalized use. In other words, it is a contract through which the parties agree not to disclose information covered by the agreement. In rare cases, the contract may state that the existence of the NDA itself cannot be disclosed. An NDA creates a confidential relationship between the parties to protect any type of trade secret. As such, an NDA can protect non-public business information.
NDAs are commonly signed when two companies or individuals are considering doing business together and need to understand the processes used in one another’s businesses solely for the purpose of evaluating the potential business relationship. NDAs can be “mutual”, meaning both parties are restricted in their use of the materials provided, or they can only restrict a single party.
It is also possible for an employee to sign an NDA or NDA-like agreement with a company at the time of hiring, in fact, some employment agreements will include a clause restricting “confidential information” in general. Likewise, NDAs are used in the IT field and given directly prior to taking a certification exam.
Some common issues handled within an NDA include:
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This glossary post was last updated: 25th April, 2020 | 0 Views.