Non-Disclosure Agreement (NDA)

A Non-Disclosure Agreement, also sometimes called a Confidentiality Agreement, is a document used when two people or companies enter into a new (or potential) business relationship. It protects the rights of either one or both of the parties that will be revealing confidential information in the course of their negotiations or relationship. In most business relationships, especially at the beginning, one or both parties end up revealing detailed commercial information and otherwise secret confidential information in order to give the other party the most knowledge possible to decide whether to pursue a relationship. Non-Disclosure Agreements can help both parties feel comfortable revealing such information, so that commercial negotiations can continue openly and honestly.

A Non-Disclosure Agreement makes it so that the party receiving the confidential information isn't permitted to disclose it to anyone else or use it in any unauthorized way. There are two specific categories of information that are treated differently in Non-Disclosure Agreements - general confidential information and trade secret information - and a good NDA will make sure to carve out separate protections for these separate categories. For the start of a new business relationship in the digital age, a Non-Disclosure Agreement is a great asset to have.

How to use this document

When deciding to enter into a new business relationship (or at the start of such a relationship), either party can use a Non-Disclosure Agreement to help protect private commercial information. In this document, identifying details of each of the parties and length of time for the contract will be entered. This Non-Disclosure Agreement is robust, and will help ensure that any secret business information stays secret when two parties are beginning a new commercial relationship.

The parties can also mark whether they would like to protect any special "Trade Secrets." A trade secret is something like a recipe or formula or process that gives someone an advantage over competitors - and something that isn't public information to customers. Trade Secrets get even more protection than typical confidential business information, so if one party has something very specific to their business that they need to obtain or maintain a commercial advantage, this Non-Disclosure Agreement will also help protect that.

After this agreement is filled out, it should be printed and signed by both parties. Then, each party should keep a copy.

Applicable law

Non-Disclosure Agreements are subject to the laws of individual states. There is no one federal law covering Non-Disclosure Agreements. In some states, Non-Disclosure Agreements will be interpreted under laws applying specifically to these type of documents. In other states, Non-Disclosure Agreements will be interpreted according to the general rules of contract law.

There is, however, a Uniform Trade Secrets Act, which is a model act that has been adopted by the majority of the U.S. States and the District of Columbia.

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