A non-disclosure agreement (NDA) is an agreement between two or more parties to not disclose to third parties the confidential information exchanged between the parties. These types of agreements protect non-public business information. The agreement can be one-way, where only one party is disclosing confidential information to the other or two-way/mutual, where both parties are disclosing confidential information to each other. NDAs also can be referred to as confidentiality agreements, confidential disclosure agreements, proprietary information agreements or secrecy agreements.
You should use NDAs when you plan to disclose confidential, non-public information to third parties outside of your business, for example, customers, clients, investors (to the extent they are willing to execute an NDA), consultants, contractors and anyone else you plan on sharing confidential information. The NDA should be a formal, written agreement that clearly describes the confidential information, defines the permitted uses of the confidential information and also specifies the length of time the parties agree not to disclose the other’s confidential information.
NDAs generally contain a list of standard exceptions; be on the lookout for exceptions to the NDA that are out of the ordinary or that create ambiguities or broad exceptions to the confidentiality obligations. Also be sure that the term of the NDA is long enough to protect the anticipated duration during which it will be important that your confidential information is not in the public domain. Finally, the NDA should be limited to what it is—an agreement about confidentiality; if the NDA includes provisions purporting to cross-license confidential information of one or more parties, ownership of jointly developed intellectual property or similar matters, it has no place in an NDA. If those provisions make business sense, they should be carefully reviewed and negotiated as part of a separate agreement specific to that purpose. Access NDA forms in our Document Generator.