Nda - non disclosure agreement

In business and related transactions, the need to share confidential information with others would arise in many instances. However, you should endeavor to share confidential information in a safer manner --- and the key is to ensure that the party you want to share the confidential information with will take responsibility of not using the information other than the intended purpose. And, a common way to make sure that the secrecy of the information given to another party is not violated is to adopt non disclosure agreement.

Non Disclosure Agreement Definition

NDA, which is the short form of Non Disclosure Agreement, is a legal contract between two or more parties, specifying knowledge, confidential material, or other form of information that the parties intend to share or divulge to one another for purposes known to them, but do not want third parties to access such confidential material.

NDA is known with other names such as confidentiality agreement (CA), secrecy agreement (SA), proprietary information agreement (PIA), and confidential disclosure agreement. This contract enables the parties involved to come to an agreement not to disclose or reveal information stated and covered by the agreement.

It’s a legal way to accomplish confidential relationship involving two or more parties, in order to protect proprietary information, trade secrets or confidential information. Just like any other contract, non disclosure contract will not be enforceable if the activities requiring the contract are felonies. 

Typical examples of NDAs include the following;

Attorney-client privilegeDoctor-patient confidentialityBank-client confidentialityPriest-penitent privilegeKickback-agreementsDoctor-patient confidentiality…and moreThe Use of NDA in The United Kingdom

In the U.K, NDA is not only used for trade secrets protection, but also as a condition or form of financial statement intended to prevent whistle-blowing employees from bringing their former employers’ misdeeds to the open.

When is NDA Signed?

Generally, NDA is signed when parties such as two individuals, companies, or other entities (e.g. societies and partnerships) get involved in a business and wish to know the processes adopted in the business of each party, in order to assess the prospective business relationship. 

This type of contract is “mutual” --- in essence, the parties to the nda agreement are restricted when it comes to using the materials provided --- they may also restrict a single party’s use of the material or information. For instance, an employee non disclosure agreement is provided by an employer and signed by an employee, for the purpose of protecting trade secrets. 

Here are other typical situations where an NDA contract may be adopted;

Presentation of business idea, trade secrets or invention to a prospective partner, investor, or even a distributorPresenting new technology, technique or product to a potential licensee or buyerSharing information related to marketing, finance and other essentials to a potential business acquirer or buyerEnabling employees to gain access to proprietary information, product formation techniques, and other confidential information in the course of performing their dutiesWhen an individual or a company providing services may need to access sensitive materials or information in the course of rending their services to a client.NDA Advice for Start-ups: If you are just getting started in business as an entrepreneur, non disclosure agreement may not be a sensible approach since you are merely making effort to raise funds through venture capital investors --- such investors will not consent to sign the contract.

Be Aware of Certain NDA Exceptions or “As Required by the Law” Carve Out

Usually, non disclosure agreements will have a “carve out” from an obligation to refrain from disclosing confidential information. You should pay attention to such exceptions or “carve out” as required by the law. Typical example is a situation where a court of law orders information disclosure. 

Another typical example involves employers --- many states now restrict the ability of an employer to restrain an employee from making certain disclosures. Typical instance is the exception put in place by California’s Government Code § 12964.5 --- this law makes it unlawful for any employer to mandate an employee

to sign a paper that tends to deny an employee the right to disclose information regarding illegal acts in the workplace.

Conclusion

It’s important to watch out for ownership issues when embarking on an NDA. Typical instance includes proposed provisions that may lead to a transfer of your company’s proprietary information to a party or parties to the agreement. 

Further Reading:

"Consultation on Confidentiality Clauses". UK Department for Business, Energy & Industrial Strategy. March 2019.Attorney-client privilege – Wikipedia Signing a Non Disclosure Agreement – New York Times