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A non-disclosure agreement (NDA), also called a confidentiality agreement or confidential disclosure agreement, is a legal contract between two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain evaluation purposes, but wish to restrict from wider use or dissemination. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects non-public business information, and if the information is leaked, the injured party can claim a breach of contract.
NDAs are commonly used when two companies, individuals, or other entities (such as partnerships, cooperatives, etc.) are considering a relationship or collaboration and need to understand the other's processes, methods, or technology solely for the purpose of evaluating the potential of a business relationship. In this context, an NDA allows the parties to have open and honest communications allowing a better evaluation of such potential.
How to use this document
In a new business relationship, NDAs can be either:
This document will identify the details of each party, the length of time during which the agreement will run, and the specific purpose for which the confidential information will be disclosed. This non-disclosure agreement will ensure that confidential business information is not divulged.
The parties will both need to sign the document. Once the document is signed, each party should keep a copy of the NDA for their records.
In Canada, the majority of laws governing confidential information are based on common law, except in Quebec where statutes play a larger role. This means that there is minimal if any, specific legislation on this subject. Non-disclosure agreements will be interpreted based on the applicable common law in the province or territory specified in the agreement. It is important to seek legal counsel to understand the nuances and regional variations in the interpretation of such agreements.
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